Arkansas Retainage Guide and FAQs

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Arkansas Retainage FAQs

Arkansas Retainage Overview

Arkansas Retainage Requirements


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  • Public Jobs
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Retainage No Limit Icon
No Retainage Limits

Not Regulated by State Law


Payment Period Not Regulated Icon
Pay Period

Not Regulated by State Law


NO
PROCESS
There's No Process to Recover

N/A


No Escrow Icon
Not Held In Escrow

In Arkansas, contractors and owners do not need to hold retainage funds in a separate escrow account.

Retainage 10% Icon
10 Percent

Retainage rate is generally 10%. Upon 50% completion of the project, no additional withholding is allowed.


Payment Period 30 Days Icon
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.


NO
PROCESS
There's No Process to Recover

Not Specified

Retainage serves two general purposes: (1) To provide an incentive to the contractor or subcontractor to complete the project; and (2) 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 frequently asked questions about Arkansas’ retainage requirements. The Arkansas retainage statutes are reproduced below on this page.

Arkansas Retainage Frequently Asked Questions

Arkansas Retainage Private Projects FAQs

Does Arkansas limit the amount of retainage that can be withheld from a contractor?

Arkansas does not have a retainage statute for private projects, so this is not specified.

How long can a party withhold retainage in Arkansas?

Arkansas does not have a retainage statute for private projects, so this is not specified.

Does Arkansas require retained funds be deposited in a special account? Can securities be substituted for retainage?

Arkansas does not have a retainage statute for private projects, so this is not specified.

How can I make a claim to recover retainage in Arkansas?

Arkansas does not have a retainage statute for private projects, so this is not specified.

Is there a specific notice required to recover retainage in Arkansas?

Arkansas does not have a retainage statute for private projects, so this is not specified.

Arkansas Retainage Public Projects FAQs

Does Arkansas limit the amount of retainage that can be withheld from a contractor?

Retainage rate is generally 10%. Retainage on progress payments are not allowed (the cost of materials or equipment stored on the job site).  This does not apply to contracts entered into by the State Highway Commission for the construction or maintenance of public highways, roads, or streets.

How long can a party withhold retainage in Arkansas?

Upon 50% completion of the project, no additional withholding is allowed. If completion is determined by partial occupancy, withheld amounts are to be released within 30 days in proportion of completed amount to the total value of the project.

Does Arkansas require retained funds be deposited in a special account? Can securities be substituted for retainage?

Original contractor may substitute securities instead of retainage.

How can I make a claim to recover retainage in Arkansas?

This is not specified in the Arkansas retainage statute for public projects.

Is there a specific notice required to recover retainage in Arkansas?

This is not specified in the Arkansas retainage statute for public projects.

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Arkansas Retainage
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Arkansas Retainage Statute FAQs

Getting informed about prompt payment laws is important. An examination of Arkansas’ retainage laws, the rules and regulations related to the amount and timing of allowable retained payments, is important to know your rights and responsibilities as a party on a construction project. Arkansas’ specific laws can be found in: Ark. Code Ann. § 22-9-604 and § 22-9-501, are reproduced below.

Retainage Statute on Private Projects

N/A

Arkansas does not provide a retainage statue for private projects.

Retainage Statute on Public Projects

§ 22-9-604: Procedure

(a)(1)(A) In the case of a construction contract entered into between a public agency and a contractor who is required to furnish a performance and payment bond, the contractor shall be entitled to payment of ninety-five percent (95%) of the earned progress payments when due, with the public agency retaining five percent (5%) to assure faithful performance of the construction contract.
(B)(i) A public agency may forego withholding retainage of the progress payments if:
(a) The construction contract is fifty-percent (50%) complete;
(b) The contractor has provided the work in a satisfactory manner; and
(c) The design professional and public agency agree with and approve of subdivisions (a)(1)(B)(i)(a) and (b) of this section.
(ii) This subdivision (a)(1)(B) does not prohibit a public agency from withholding retainage throughout the project.
(2) If the construction contract allows for phased work in which completion may occur on a partial occupancy, any retention proceeds withheld and retained under this section shall be partially released within thirty (30) days under the same conditions under this section in direct proportion to the value of the part of the capital improvement completed.
(b)(1) In the case of a construction subcontract entered into between a contractor for a public agency and a subcontractor who is required by the contractor to furnish a performance and payment bond, the subcontractor shall be entitled to payment of ninety-five percent (95%) of the earned progress payments when due, with the contractor retaining five percent (5%) to assure faithful performance of the construction subcontract.
(2) Upon the approval of the contractor, if the subcontractor completes fifty percent (50%) of the construction subcontract the contractor shall not retain any further moneys.
(c) All sums withheld by the public agency shall be paid to the contractor within thirty (30) days after the construction contract has been completed.
(d) In the event the construction contract requires the contractor to purchase and furnish materials or equipment that will be stored on the job site or in a bonded warehouse by the contractor and used in the job as required by the construction contract, no retainage shall be withheld on that amount of the submitted progress payment pertaining to the cost of these stored materials or equipment

§ 22-9-501: Substitution of Securities for Retained Payments; Contracts Generally

a) Under any contract made or awarded by the state or by any public department or official thereof, including the construction, improvement, or repair of any and all ways, roads, or bridges with appurtenances which, by law, are under the supervision of the State of Arkansas or any political subdivision, the contractor may withdraw the whole, or any portion thereof, of the amount retained for payments to the contractor pursuant to the terms of the contract upon depositing with the Treasurer of State, except as provided in 22-9-502, direct obligations of or obligations fully guaranteed by the federal government or any agency or department thereof, obligations of the State of Arkansas, obligations of any public housing authority, or certificates of deposit from federal or state banks or savings and loan associations.

(b) No amount shall be withdrawn in excess of the market value of the securities at the time of deposit or at the time of withdrawal.

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