Connecticut Retainage Requirements
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- Public Jobs
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5% Retainage Limit
5% of the estimated amount of payment
30 Day Pay Period
Owners must pay funds within 30 days of request. Contractors must pay within 30 days of receipt of funds.
There is a Process to Recover
Yes. written notice through registered or certifed mail required.
Held In Escrow
In Connecticut, contractors and owners need to hold retainage funds in a separate escrow account.
The Department of Works or State Agency projects have a maximum retainage rate of 7.5%. The Department of Transportation projects have a maximum retainage rate of 2.5%. Municipal contracts have a maximum retainage rate of 5%.
30 Day Pay Period
General contractors (and subcontractors) must pay subcontractors within 30 days of receiving payment.
There's No Process to Recover
No process is specified by state statute.
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 Connecticut’s retainage requirements. The Connecticut retainage statutes are reproduced below on this page.
Connecticut retainage limits and deadlines
On private projects, the amount of retainage that can be withheld is capped at no more than 5% of each progress payment and is required to be deposited by the owner in an escrow account. Upon completion and acceptance of the project, retainage must be released by the owner within 30 days. In turn, upon receipt, retainage should be released to the party’s subs and suppliers within 30 days.
On public projects, the amount of retainage varies depending on the public entity that commissioned the work. On state projects, retainage is limited to no more than 7.5% of each progress payment. However, upon 50% completion, retainage must be reduced to no more than 5% of the remaining progress payments. On municipal government projects, the amount that can be withheld is no more than 5% of each progress payment. Lastly, on Department of Transportation projects, the maximum amount of retainage is set at 2.5%.