Maine Retainage Guide and FAQs

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Maine Retainage FAQs

Maine Retainage Overview

Maine Retainage Requirements


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  • Public Jobs
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Retainage Unregulated Icon
No Retainage Limits

Not Regulated by State Law


Payment Period 30 Days Icon
30 Day Pay Period

Owners must release retainage within 30 days after final acceptance of the work. Contractors must release retainage withheld from subcontractors within 7 days of owner releasing retainage to contractor.


YES
PROCESS
There is a Process to Recover

Final request for payment upon completion of work unless otherwise agreed in contract.


No Escrow Icon
Not Held In Escrow

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

Retainage 5% Icon
5 Percent

Public entity must withhold 5% of the amount due to the contractor, but this percentage may be reduced upon substantial completion of the work.


Payment Period Icon
Pay Period

The State will release funds when project under the contract has been accepted by or for the State.


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

Maine Retainage Frequently Asked Questions

Maine Retainage Private Projects FAQs

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

The limit on retainage for private projects is not specified by Maine law.

How long can a party withhold retainage in Maine?

Any amounts retained during the performance of the contract and due to be released upon completion must be paid within 30 days after final acceptance of the work. Contractors may withhold retainage from subcontractors and suppliers even if retainage is not being withheld from them. However, the contractor must pay the amount due within 7 days of receipt of retainage withheld by owner.

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

The Maine retainage statute does not specify.

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

Unless specified otherwise in the contract, the contractor may submit a final invoice for payment in full upon completion of the agreed upon work.

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

See above.

Maine Retainage Public Projects FAQs

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

Public entity must withhold 5% of the amount due to the contractor, but this percentage may be reduced upon substantial completion of the work.

How long can a party withhold retainage in Maine?

The State will release funds when project under the contract has been accepted by or for the State.

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

Securities may be substituted for retainage.  Must be deposited with the Treasurer of State.

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

This is not specified by the Maine retainage statute.

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

This is not specified by the Maine retainage statute.

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Maine Retainage
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Maine Retainage Statute FAQs

Getting informed about prompt payment laws is important. An examination of Maine’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. Maine’s specific laws can be found in: ME. Rev. Stat. Ann. tit. 5, § 1746, and are reproduced below.

Retainage Statute on Private Projects

N/A

Maine does not provide a retainage statue for private projects.

Retainage Statute on Public Projects

5 § 1746: Retention of Part of Contract Price

In any contract awarded for any public improvement the State shall withhold 5% of the money due the contractor until the project under the contract has been accepted by or for the State, except that when the contract has been substantially completed the State may, upon request, further reduce the amounts withheld if it deems it desirable and prudent.

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 Department of Transportation, the contractor may, from time to time, withdraw the whole or any portion of the amount retained for payments to the contractor pursuant to the terms of the contract, upon depositing with the Treasurer of State: A negotiable certificate of deposit, United States treasury bonds, United States treasury notes, United States treasury certificates of indebtedness, United States treasury bills, or bonds or notes of the State of Maine or bonds of any political subdivision in the State of Maine. No amount shall be withdrawn in excess of the market value of the securities at the time of deposit or of the par value of such securities, whichever is lower.

Any amount deducted by the State, or by any public department or official thereof, pursuant to the terms of the contract, from the retained payments due the contractor, shall be deducted, first from that portion of the retained payments for which no security has been substituted, then from the proceeds of any deposited security. In the latter case, the contractor shall be entitled to receive interest, coupons or income only from those securities which remain after such amount has been deducted.

Any assignment of retained payments made by the contractor shall be honored by the Treasurer of State as part of the procedure to accomplish the substitution of securities under this section, provided that such assignment will not be made without prior notification to the contracting agency of the State and the Treasurer of State. Such assignment shall not impair the equitable rights of the contractor’s surety in the retained payments or in the securities substituted therefor in the event of the contractor’s default in the performance of the contract or in the payment of labor and material bills or other obligations covered by said surety’s bond.

Any contract made or awarded by the State, political subdivision or department or official thereof shall include the cost of necessary pollution control, if any, which will be required during the execution of the contract; provided the cost of pollution control activity which is required by legislation or regulation, passed or promulgated after the date on which bids are received for the project for which such contract is made or awarded, shall be paid for in an equitable manner.

The Director of the Bureau of General Services may approve contracts with a provision for daily financial incentive for projects completed before the scheduled date when it can be demonstrated that the early completion will result in a financial savings to the owner or to the State. The financial incentive may not be greater than the projected daily rate of savings to the owner or the State.

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