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Idaho Retainage Guide and FAQs

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Idaho Retainage FAQs

Idaho Retainage Overview

Idaho Retainage Requirements


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Retainage 5% Icon
5% Retainage Limits

Upt to 5% of each payment, and cannot exceed 5% of the total contract price. The limit does not apply if a performance bond is requested and not posted.


Payment Period 35 Days Icon
35 Day Pay Period

Retainage funds must be released to the original contractor within 35 days from the final completion of the work, unless there's a dispute. The original contractor must release retainage to each subcontractor within 10 days from the time that any portion of retainage is received by the original contractor.


NO
PROCESS
There's No Process to Recover

Not specified


No Escrow Icon
Not Held In Escrow

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

Retainage 5% Icon
5 Percent

On projects for which a performance or payment bond in excess of 50% of the total contract amount is required, retainage is limited to not more than 5% of the money owed to the contractor. Otherwise, 10% of the contract price must be withheld.


Payment Period 30 Days Icon
30 Day Pay Period

Retainage must be released within 30 days after the acceptance of the portion of the work related to the retainage. For projects without payment and performance bonds, retainage will be released 90 days after the completion of work. Retainage must be released down-the-chain within 30 days of receiving retainage payments.


YES
PROCESS
There is a Process to Recover

Yes, written notice must be provided within 90 days.

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 Idaho’s retainage requirements. The Idaho retainage statutes are reproduced below on this page.

Idaho Retainage Frequently Asked Questions

Idaho Retainage Private Projects FAQs

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

Retainage withheld from the contractor or subcontractor is limited to not more than 5% unless there is no performance bond. This is not applicable to owner-occupied residential construction projects of four or fewer units.

How long can a party withhold retainage in Idaho?

Within 35 days from the date of final completion of the work, retainage funds withheld by the owner must be released, unless in the event of a dispute. Within 10 days from the time that all or any portion of retainage is received by the original contractor, the original contractor must pay each subcontractor from whom retainage has been withheld.

Please note that if a bona fide dispute exists between two parties, the paying party may withhold 150% of the disputed amount beyond the deadlines stated above.

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

This is not specified by the Idaho retainage statute for private projects.

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

This is not specified by the Idaho retainage statute for private projects.

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

This is not specified by the Idaho retainage statute for private projects.

Idaho Retainage Public Projects FAQs

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

On projects for which a performance or payment bond in excess of 50% of the total contract amount is required, retainage is limited to not more than 5% of the money owed to the contractor. Same rules apply to retainage on payments to subcontractors. If a performance or payment bond is not required, 10% of the contract price must be reserved at all times.

How long can a party withhold retainage in Idaho?

Retainage must be released within 30 days after the acceptance of the portion of the work related to the retainage. Same rules apply to retainage payments to subcontractors. If no performance or payment bond is required, retainage funds will be released after the completion of work following the 90 day claims period.

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

This is not specified by the Idaho retainage statute for public projects.

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

There is a 90 day period after labor has been completed in which a contractor or subcontractor in which a claim must be made.

Is there a specific notice required to recover retainage in Idaho?Written notice of a claim must be given to the contractor within the 90 day period discussed above.

Written notice of a claim must be given to the contractor within the 90 day period discussed above.

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Idaho Retainage
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Idaho Retainage Statutes

Getting informed about prompt payment laws is important. An examination of Idaho’s 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. Idaho’s specific laws can be found in: Idaho Code § 29-115, § 54-1926 and § 42-2944, and are reproduced below.

Retainage Statute on Private Projects

§ 29-115: Construction Contracts

(1) This section is applicable with respect to all contracts entered into on or after July 1, 1990, between owners and original contractors relating to the construction of any private work of improvement.
(2)  In any contract relating to the construction of any private work of improvement, the retention proceeds withheld by the owner from the original contractor or by the original contractor from any subcontractor from any payment shall not exceed five percent (5%) of the payment and in no event shall the total retention withheld exceed five percent (5%) of the contract price. However, the five percent (5%) maximum that may be withheld does not apply if the original contractor or the subcontractor fails to provide a performance bond issued by a surety acceptable to the owner or original contractor if requested to do so by the owner or original contractor respectively. The five percent (5%) maximum shall not apply to any contract for the performance of a private work of improvement to residential real property consisting of one (1) to four (4) units occupied or to be occupied by the owner.
(3)  Within thirty-five (35) days from the date on which the work of improvement is substantially complete, as mutually agreed to by the parties to the contract, the retention withheld by the owner shall be reduced to the lesser of one hundred fifty percent (150%) of the estimated value of work yet to be completed in accordance with the contract or the retention then withheld by the owner, not to exceed five percent (5%) of the contract price.
Within thirty-five (35) days from the date of final completion of the work of improvement, the retention withheld by the owner shall be released, except in the event of a dispute between the owner and the original contractor, the owner may withhold from the final retention payment an amount not to exceed one hundred fifty percent (150%) of the estimated value of the issue in dispute. The owner may condition the final release of the retention upon receipt of satisfactory lien waivers from all persons with actual or potential lien claims on the work of improvement.
(4)  Subject to subsection (5) of this section, within ten (10) days from the time that all or any portion of the retention proceeds are received by the original contractor, the original contractor shall pay each of its subcontractors from whom retention has been withheld, each subcontractor’s share of the retention received. However, if a retention payment received by the original contractor is specifically designated for a particular subcontractor, payment of the retention shall be made to the designated subcontractor.
(5)  The original contractor shall not be required to pay the retention to a subcontractor if a bona fide dispute exists between the subcontractor and the original contractor. The amount withheld from the retention payment shall not exceed one hundred fifty percent (150%) of the estimated value of the work yet to be completed or issue in dispute.
(6)  It shall be against public policy for any party to require any other party to waive any provision of this statute.

Retainage Statute on Public Projects

§ 54-1926: Performance and Payment Bonds Required of Contractors for Public Buildings and Public Works of the State, Political Subdivisions and other Public Instrumentalities

Before any contract for the construction, alteration, or repair of any public building or public work or improvement of the state of Idaho, or of any county, city, town, municipal corporation, township, school district, public educational institution, or other political subdivision, public authority, or public instrumentality, or of any officer, board, commission, institution, or agency of the foregoing, is awarded to any person, he shall furnish to the state of Idaho, or to such county, city, town, municipal corporation, township, school district, public educational institution, or other political subdivision, public authority, or public instrumentality, or to such officer, board, commission, institution, or agency thereof, bonds which shall become binding upon the award of the contract to such person, who is hereinafter designated as “contractor”:

(1)  A performance bond in any amount to be fixed by the contracting body, but in no event less than eighty-five percent (85%) of the contract amount conditioned upon the faithful performance of the contract in accordance with the plans, specifications and conditions thereof. Said bond shall be solely for the protection of the public body awarding the contract.

(2)  A payment bond in an amount to be fixed by the contracting body but in no event less than eighty-five percent (85%) of the contract amount, solely for the protection of persons supplying labor or materials, or renting, leasing, or otherwise supplying equipment to the contractor or his subcontractors in the prosecution of the work provided for in such contract.

(3)  Public bodies requiring a performance bond or payment bond in excess of fifty percent (50%) of the total contract amount shall not be authorized to withhold from the contractor or subcontractor any amount exceeding five percent (5%) of the total amount payable as retainage. Further, the public body shall release to the contractor any retainage for those portions of the project accepted by the contracting public body and the contractors as complete within thirty (30) days after such acceptance. Contractors, contracting with subcontractors pursuant to contract work with a public body, shall not be authorized to withhold from the subcontractor any amount exceeding five percent (5%) of the total amount payable to the subcontractor as retainage. The contractor shall remit the retainage to the subcontractor within thirty (30) days after completion of the subcontract.

Each bond shall be executed by a surety company or companies duly authorized to do business in this state, or the contractor may deposit any of the type of government obligations listed in subsection (2)(h) of section 54-1901, Idaho Code, in lieu of furnishing a surety company performance or payment bond or bonds. In the case of contracts of the state or a department, board, commission, institution, or agency thereof the aforesaid bonds shall be payable to the state, or particular state agency where authorized. In case of all other contracts subject to this chapter, the bonds shall be payable to the public body concerned.
Said bonds shall be filed in the office of the department, board, commission, institution, agency or other contracting body awarding the contract.
Nothing in this section shall be construed to limit the authority of the state of Idaho or other public body hereinabove mentioned to require a performance bond or other security in addition to these, or in cases other than the cases specified in this chapter.
It shall be illegal for the invitation for bids, or any person acting or purporting to act, on behalf of the contracting body to require that such bonds be furnished by a particular surety company, or through a particular agent or broker.

§ 42-2944: Payments to Contractors

Payments to contractors. During the construction of said improvement, said commissioners shall have the right to allow payment thereof, in installments as the work progresses, in proportion to the amount of work completed: provided, that no allowance or payment shall be made for said work to any contractor or subcontractor to exceed ninety per cent (90%) of the proportionate amount of the work completed by such contractor or subcontractor, and ten per cent (10%) of the contract price shall be reserved at all times by said board of commissioners until said work is wholly completed, and shall not be paid upon the completion of said work until ninety (90) days have expired for the presentation of all claims for labor performed and materials, goods, wares, merchandise and provisions furnished or used in the construction of said improvements. Upon the completion of said work and the payment of all claims hereinbefore provided for according to the terms and conditions of said contract, said commissioners shall accept said improvement and pay the contract price therefor.

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