Iowa Retainage Requirements
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Retainage Limit
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 Iowa, contractors and owners do not need to hold retainage funds in a separate escrow account.
5 Percent
Retainage cannot exceed 5% of the estimated labor/material furnished.
30 Day Pay Period
Funds shall be released within 30 days of when payment to contractor becomes due. Payment to a subcontractor must be made no later than (1) 7 days after the contractor receives payment; or (2) "A reasonable time after the contractor could have received payment for subcontractor’s work, if the reason for nonpayment is not the subcontractor's fault."
There is a Process to Recover
Claim must be filed with public entity within 30 days of final acceptance - period can be extended if full contract price unpaiud.
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 Iowa’s retainage requirements. The Iowa retainage statutes are reproduced below on this page.