Georgia Retainage Requirements
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Must be "reasonable" and is set by contract between owner and GC
10 Day Pay Period
An owner may withhold payment as long as one of the prescribed reasons still exist (see FAQ). A contractor must disburse funds to subs within 10 days of receipt.
There is a Process to Recover
As set forth by contract.
Not Held In Escrow
In Georgia, contractors and owners do not need to hold retainage funds in a separate escrow account.
Retainage cannot exceed 10% of each progress payment.
30 Day Pay Period
After substantial completion, the public entity must release the retained amount within 30 days of receiving contractor's invoice. However, the public entity may withhold 200% of the value of any incomplete items, to be released upon the specific item’s completion. Contractor and subs must release retainage down the chain witin 30 days of receiving retainage payments.
There is a Process to Recover
Yes, certification from engineer that work is completed satisfactorily is required.
Georgia has several laws that govern retainage on construction projects in the state.
Retainage is common on construction projects across the country, and serves two general purposes:
- Provide an incentive to the contractor or subcontractor to complete the project
- 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 Georgia’s retainage requirements. The Georgia retainage statutes are reproduced below on this page.
Retainage in Georgia Law
Prompt Payment Laws
The Georgia Prompt Payment Act sets deadlines for payments on construction projects, both public and private. However, it does not set a specific limit on the amount of retainage that can be held under a contract. This statute only stipulates that retainage be “reasonable.” (O.C.G.A. §13-11)
The property owner may not withhold retainage that exceeds the percentage set forth in the prime contract. In addition, the retainage withheld by the GC “shall not exceed the percentage retained from the contractor by the owner on account of the subcontractor’s work.”
Once a project has reached substantial completion, the property owner must release retainage within 30 days after receiving the final payment application. After receiving retainage, contractors must release retained funds to parties below them within 10 days.
If retainage isn’t released on time, the claimant is entitled to interest penalties.
Retainage on Public Projects
On public works projects in Georgia, retainage is capped at 10% of each progress payment. (O.C.G.A §13-10-81)
Once a project is 50% complete, retainage must be eliminated if progress is deemed satisfactory.
Upon completion of the project, if any items are incomplete, the public entity may withhold 200% of the value of the remaining work. This must be released once the specific work is completed.
On projects contracted under the Georgia Department of Transportation (DOT), final payment including retainage is subject to approval by the engineer. (O.C.G.A. §32-2-75)