Maryland Retainage Requirements
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5 Percent
On a project that is 100% bonded, retainage cannot exceed 5%.
90 Day Pay Period
The property owner shall release any retainage within 90 days after the date of substantial completion.
There is no Process to Recover
N/A
Not Held In Escrow
In Maryland, contractors and owners do not need to hold retainage funds in a separate escrow account.
5 Percent
On a project that is 100% bonded, retainage cannot exceed 5%.
120 Day Pay Period
The public entity shall release any retainage within 120 days after satisfactory completion of the contract. If there is a dispute, the 120 day period starts after the resolution of the dispute or contract claim.
There is a Process to Recover
Yes, claim must be filed within 1 year of acceptance of work.
Retainage, also called “retention,” is an amount of money “held back” from a contractor or subcontractor during the course of a construction project. In general, retainage serves two main purposes:
- To provide an incentive to the contractor or subcontractor to complete the project; &
- 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 answers to frequently asked questions about Maryland’s retainage requirements.
Maryland’s retainage limits and deadlines
On both private and public construction projects in Maryland, if the project is fully bonded; meaning there is a payment and a performance bond posted for the total contract price, then no more than 5% of each progress payment may be withheld as retainage.
As for the timing of the release of retainage. On private projects, retainage must be released by the property owner no later than 90 days after substantial completion. Once payment is received, retainage should be released to subs and suppliers within 7 days. On public projects, the public entity must release retainage within 120 days of satisfactory completion of the project. However, if there is a dispute or contract claim between the parties, the 120 days won’t begin to count until the dispute or claim is resolved. After receipt, the contractor should release retainage to subs and suppliers within 10 days.
