Arkansas Retainage Requirements
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No Retainage Limits
Not Regulated by State Law
Pay Period
Not Regulated by State Law
There's No Process to Recover
N/A
Not Held In Escrow
In Arkansas, contractors and owners do not need to hold retainage funds in a separate escrow account.
5 Percent
Retainage is capped at no more than 5%. Upon 50% completion of the project, no additional withholding is allowed.
30 Day Pay Period
All sums withheld by the public agency shall be paid to the contractor within thirty (30) days after the construction contract has been completed. If the contract allows for phased work in which completion may occur via partial occupancy, retainage must be released within 30 days of the completion of that phase.<br />
There's No Process to Recover
Not Specified
Retainage, also called “retention,” is an amount of money “held back” from a contractor or subcontractor during the course of a construction project. In general, retainage serves two main purposes:
- To provide an incentive to the contractor or subcontractor to complete the project; &
- To give the owner some protection against problems like liens, contractual defaults, delays, and more.
In most states, laws exist to regulate how the parties use the retainage concept, mostly protecting some parties against abuse of the tool from others. The following are resources, legal information, and answers to frequently asked questions about Arkansas’ retainage requirements.
Arkansas’ retainage limits and deadlines
Arkansas’ retainage statutes only apply to public works projects. On all other projects, retainage will be governed by the terms of the contract.
The amount of retainage that can be withheld on public projects in Arkansas is capped at no more than 5% of each progress payment. However, upon 50% completion, if the contractor is making satisfactory progress, the public entity or contractor (as applicable) can decide to withhold no more retainage from the remaining progress payments.
The public entity is required to release any withheld retainage to the prime contractor within 30 days of completion and acceptance of the project. As far as the release of retainage to subcontractors and suppliers, there is no specific deadline, nor are payments to subcontractors governed by Arkansas’ prompt payment laws. Therefore, the timing of the release of retainage down the payment chain will be governed by the terms of the subcontract.
