Nevada Retainage Guide and FAQs

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Nevada Retainage FAQs

Nevada Retainage Overview

Nevada Retainage Requirements


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  • Public Jobs
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Retainage 5% Icon
5% Retainage Limit

Retainage cannot exceed 5% of each progress payment.


Payment Period Icon
Pay Period

When the improvement is occupied by the owner, or available for use for its intended purpose, retainage must be released within 30 days.


NO
PROCESS
There's No Process to Recover

Not specified


No Escrow Icon
Not Held In Escrow

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

Retainage 5% Icon
5 Percent

Public entity must retain 5% prior to 50% completion. After 50% completion the entity will either no longer withhold retainage or it will be reduced to 2.5%.


Payment Period Icon
Pay Period

Once 50% completion has been reached, and if the performance is satisfactory, the public entity may pay any retainage amount previously withheld. If not, retainage will be released within 30 days of completion of the improvement.


YES
PROCESS
There is a Process to Recover

Yes, written request can be made to public entity regarding retainage payments.

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 frequently asked questions about Nevada’s retainage requirements. The Nevada retainage statutes are reproduced below on this page.

Nevada retainage limits and deadlines

Private projects

Retainage on private projects in Nevada is capped at 5% from each progress payment on the project. Any withheld retainage funds must be released by the property owner within 30 days of completion of the project. Once received by a contractor, they must release retainage payments to their subs and suppliers within 10 days.

Public projects

On Nevada public works projects, the amount of retainage to be withheld is also 5% of each progress payment. Upon 50% completion, if the public entity determines that the project is achieving satisfactory progress, they can choose to stop withholding retainage from the remaining progress payments and release any amount of retainage withheld. If the project isn’t progressing satisfactorily, the amount of retainage withheld on remaining payments will be reduced to 2.5% and half of the retainage withheld at that point will be released. When the project reaches completion, any remaining retainage withheld must be released within 30 days, and passed down to any subs and suppliers within 10 days of receipt.

Nevada Retainage Frequently Asked Questions

Nevada Retainage Private Projects FAQs

Does Nevada limit the amount of retainage that can be withheld from a contractor on private projects?

The amount of retainage that can be withheld on a private construction project in Nevada is capped at 5% of each progress payment. However, additional amounts may be withheld for work not performed but for which payment is sought, and for costs to repair/correct deficient work.

How long can a party withhold retainage in Nevada on private projects?

Under Nevada’s prompt payment laws, the release of retainage is tied to final payment. Which, for prime contractors, unless the contract provides otherwise, is 30 days after either:

• The owner occupies or uses the work of improvement; or

• The work of improvement is available for its intended use.

Once retainage funds have been received, the party must release retainage to their subs and suppliers within 10 days.

Does Nevada require retained funds to be deposited in a special account? Can securities by substituted?

There is no particular provision requiring the deposit of withheld funds in an escrow account or substituting securities for retainage. Therefore, the ability or requirement to do so will be governed by the terms of the contract.

• Dive deeper: Retention Bonds- An Alternative to Waiting for Retainage

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

There is no particular procedure for recovering withheld retainage funds. However, other collection tools such as a Nevada mechanics lien claim, prompt payment claims, or pursuing breach of contract claims are available avenues to recover payments

For more on these recovery options see:

How to File a Nevada Mechanics Lien Claim

How to make a Claim Under Prompt Payment Laws

Is there a specific notice required to recover retainage in Nevada on private projects?

There aren’t any specific notices required to recover retainage on private projects in Nevada. Sending a prompt payment demand letter along with a notice of intent to lien is a good starting point. Keep in mind, that there are some preliminary notice requirements to make a lien claim in Nevada.

Nevada Retainage Public Projects FAQs

Does Nevada limit the amount of retainage that can be withheld from a contractor on public projects?

Yes, that amount of retainage that must be withheld on most public works projects is 5% of each progress payment. Retainage withheld from subcontractors cannot exceed the amount retained from the prime contractor.

Upon 50% completion of the project, the public entity must either no longer withhold retainage from the remaining payments, or reduce the percentage to 2.5% of each progress payment until completion of the project.

Furthermore, the public entity must pay the contractor quarterly the interest for the quarter on the amount withheld at a rate equal to the rate quoted by at least three financial institutions. If the contractor or subcontractor receives interest earned on the retainage, it must pay each subcontractor the interest accrued from the retainage within 10 days.

How long can a party withhold retainage in Nevada?

As mentioned in the previous answer, upon 50% completion of the project, the public entity must make a determination whether the satisfactory progress is being made on the project.

• If the answer is yes the entity may stop withholding retainage from the remaining payments and release any retainage withheld at that point.

• If the answer is no, the retainage withheld must be reduced to 2.5% of each progress payment and 50% of retainage withheld up until that point will be released.

Final retainage payments are tied to final payments under Nevada’s prompt payment laws. These payments are required to be released within 30 days after one of the following events:

• Entity occupies or begins using the project or a portion thereof (paid in the amount equal to the value of the portion being used)

Notice of completion for all or a portion of the project is recorded

• Partial occupation by the public entity of one or more buildings.

Once retainage has been released, contractors must, in turn, release retainage (and any interest) to their subs and suppliers within 10 days.

Does Nevada require retained funds to be deposited in a special account? Can securities by substituted?

There is no particular provision requiring the deposit of withheld funds in an escrow account or substituting securities for retainage. Therefore, the ability or requirement to do so will be governed by the terms of the contract.

• Dive deeper: Retention Bonds- An Alternative to Waiting for Retainage

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

No particular method of recovery of improperly withheld retainage funds is provided in the statute. However, other collection tools can be used to recover retained funds such as payment bond claims, claims under the Nevada prompt payment laws, or contract claims against your hiring party.

For more on these recovery options see:

How to Make a Nevada Payment Bond Claim

How to make a Claim Under Prompt Payment Laws

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

There aren’t any specific notices required to recover retainage on public projects in Nevada. Sending a prompt payment demand letter along with a notice of intent to make a bond claim  is a good starting point. Keep in mind, that there are some preliminary notice requirements to make a payment bond claim in Nevada.

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Nevada Retainage Statutes

Getting informed about prompt payment laws is important. An examination of Nevada’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. Nevada’s specific laws can be found in: Nev. Rev. Stat. §624.609 & §624.624 for private projects, and §338.515, § 338.555, & §338.595, for public projects and are reproduced below. Updated as of January 2021.

Retainage Statute on Private Projects

§ 624.609. Payment of prime contractor during performance of agreement; grounds and procedure for withholding amounts from payment; rights and duties after notice of withholding, notice of objection or notice of correction

1. Except as otherwise provided in subsections 2 and 4 and subsection 4 of NRS 624.622, if an owner of real property enters into a written or oral agreement with a prime contractor for the performance of work or the provision of materials or equipment by the prime contractor, the owner must:

(a) Pay the prime contractor on or before the date a payment is due pursuant to a schedule for payments established in a written agreement; or

(b) If no such schedule is established or if the agreement is oral, pay the prime contractor within 21 days after the date the prime contractor submits a request for payment.

2. If an owner has complied with subsection 3, the owner may:

(a) Withhold from any payment to be made to the prime contractor:

(1) A retention amount that, if the owner is authorized to withhold a retention amount pursuant to the agreement, must not exceed 5 percent of the amount of the payment to be made;

(2) An amount equal to the sum of the value of:

(I) Any work or labor that has not been performed or materials or equipment that has not been furnished for which payment is being sought, unless the agreement otherwise allows or requires such a payment to be made; and

(II) Costs and expenses reasonably necessary to correct or repair any work which is the subject of the request for payment and which is not materially in compliance with the agreement to the extent that such costs and expenses exceed 50 percent of the retention amount withheld pursuant to subparagraph (1); and

(3) The amount the owner has paid or is required to pay pursuant to an official notice from a state agency or employee benefit trust fund, for which the owner is or may reasonably be liable for the prime contractor or his or her lower-tiered subcontractors in accordance with chapter 608, 612, 616A to 616D, inclusive, or 617 of NRS; and

(b) Require as a condition precedent to the payment of any amount due, lien releases furnished by the prime contractor and his or her lower-tiered subcontractors and suppliers in accordance with the provisions of paragraphs (a) and (c) of subsection 5 of NRS 108.2457.

3. If, pursuant to subparagraph (2) or (3) of paragraph (a) of subsection 2 or paragraph (b) of subsection 2, an owner intends to withhold any amount from a payment to be made to a prime contractor, the owner must give, on or before the date the payment is due, a written notice to the prime contractor of any amount that will be withheld. The written notice of withholding must:

(a) Identify the amount of the request for payment that will be withheld from the prime contractor;

(b) Give a reasonably detailed explanation of the condition or the reason the owner will withhold that amount, including, without limitation, a specific reference to the provision or section of the agreement, and any documents relating thereto, and the applicable building code, law or regulation with which the prime contractor has failed to comply; and

(c) Be signed by an authorized agent of the owner.

4. A prime contractor who receives a notice of withholding pursuant to subsection 3 or a notice of objection pursuant to subparagraph (2) of paragraph (b) may:

(a) Give the owner a written notice and thereby dispute in good faith and for reasonable cause the amount withheld, or the condition or reason for the withholding; or

(b) Correct any condition or reason for the withholding described in the notice of withholding and thereafter provide written notice to the owner of the correction of the condition or reason for the withholding. The notice of correction must be sufficient to identify the scope and manner of the correction of the condition or reason for the withholding and be signed by an authorized representative of the prime contractor. If an owner receives a written notice from the prime contractor of the correction of a condition or reason for the withholding pursuant to this paragraph, the owner shall:

(1) Pay the amount withheld by the owner for that condition or reason for the withholding on or before the date the next payment is due the prime contractor; or

(2) Object to the scope and manner of the correction of the condition or reason for the withholding, on or before the date the next payment is due to the prime contractor, in a written statement which sets forth the condition or reason for the objection and which complies with subsection 3. If the owner objects to the scope and manner of the correction of a condition or reason for the withholding, the owner shall nevertheless pay to the prime contractor, along with the payment to be made pursuant to the prime contractor’s next payment request, the amount withheld for the correction of the condition or reason for the withholding to which the owner no longer objects.

5. Except as otherwise allowed in subsections 2, 3 and 4, an owner shall not withhold from a payment to be made to a prime contractor more than the retention amount.

§ 624.624. Payment of lower-tiered subcontractor; grounds and procedure for withholding amounts from payment; rights and duties after notice of withholding, notice of objection or notice of correction

1. Except as otherwise provided in this section, if a higher-tiered contractor enters into:

(a) A written agreement with a lower-tiered subcontractor that includes a schedule for payments, the higher-tiered contractor shall pay the lower-tiered subcontractor:

(1) On or before the date payment is due; or

(2) Within 10 days after the date the higher-tiered contractor receives payment for all or a portion of the work, materials or equipment described in a request for payment submitted by the lower-tiered subcontractor, whichever is earlier.

(b) A written agreement with a lower-tiered subcontractor that does not contain a schedule for payments, or an agreement that is oral, the higher-tiered contractor shall pay the lower-tiered subcontractor:

(1) Within 30 days after the date the lower-tiered subcontractor submits a request for payment; or

(2) Within 10 days after the date the higher-tiered contractor receives payment for all or a portion of the work, labor, materials, equipment or services described in a request for payment submitted by the lower-tiered subcontractor, whichever is earlier.

2. If a higher-tiered contractor has complied with subsection 3, the higher-tiered contractor may:

(a) Withhold from any payment owed to the lower-tiered subcontractor:

(1) A retention amount that the higher-tiered contractor is authorized to withhold pursuant to the agreement, but the retention amount withheld must not exceed 5 percent of the payment that is required pursuant to subsection 1;

(2) An amount equal to the sum of the value of:

(I) Any work or labor that has not been performed or materials or equipment that has not been furnished for which payment is being sought, unless the agreement otherwise allows or requires such a payment to be made; and

(II) Costs and expenses reasonably necessary to correct or repair any work which is the subject of the request for payment and which is not materially in compliance with the agreement to the extent that such costs and expenses exceed 50 percent of the retention amount withheld pursuant to subparagraph (1); and

(3) The amount the owner or higher-tiered contractor has paid or is required to pay pursuant to an official notice from a state agency or employee benefit trust fund, for which the owner or higher-tiered contractor is or may reasonably be liable for the lower-tiered subcontractor or his or her lower-tiered subcontractors in accordance with chapter 608, 612, 616A to 616D, inclusive, or 617 of NRS; and

(b) Require as a condition precedent to the payment of any amount due, lien releases furnished by the lower-tiered subcontractor and his or her lower-tiered subcontractors and suppliers in accordance with the provisions of paragraphs (a) and (c) of subsection 5 of NRS 108.2457.

3. If, pursuant to subparagraph (2) or (3) of paragraph (a) of subsection 2 or paragraph (b) of subsection 2, a higher-tiered contractor intends to withhold any amount from a payment to be made to a lower-tiered subcontractor, the higher-tiered contractor must give, on or before the date the payment is due, a written notice to the lower-tiered subcontractor of any amount that will be withheld and give a copy of such notice to all reputed higher-tiered contractors and the owner. The written notice of withholding must:

(a) Identify the amount of the request for payment that will be withheld from the lower-tiered subcontractor;

(b) Give a reasonably detailed explanation of the condition or the reason the higher-tiered contractor will withhold that amount, including, without limitation, a specific reference to the provision or section of the agreement with the lower-tiered subcontractor, and any documents relating thereto, and the applicable building code, law or regulation with which the lower-tiered subcontractor has failed to comply; and

(c) Be signed by an authorized agent of the higher-tiered contractor.

4. A lower-tiered subcontractor who receives a notice of withholding pursuant to subsection 3 or a notice of objection pursuant to subparagraph (2) of paragraph (b) may:

(a) Give the higher-tiered contractor a written notice and thereby dispute in good faith and for reasonable cause the amount withheld or the conditions or reasons for the withholding; or

(b) Correct any condition or reason for the withholding described in the notice of withholding and thereafter provide written notice to the higher-tiered contractor of the correction of the condition or reason for the withholding. The notice of correction must be sufficient to identify the scope and manner of the correction of the condition or reason for the withholding and be signed by an authorized representative of the lower-tiered subcontractor. If a higher-tiered contractor receives a written notice from the lower-tiered subcontractor of the correction of a condition or reason for the withholding pursuant to this paragraph, the higher-tiered contractor shall:

(1) Pay the amount withheld by the higher-tiered contractor for that condition or reason for the withholding on or before the date the next payment is due the lower-tiered subcontractor; or

(2) Object to the scope and manner of the correction of the condition or reason for the withholding, on or before the date the next payment is due to the lower-tiered subcontractor, in a written statement which sets forth the condition or reason for the objection and which complies with subsection 3. If the higher-tiered contractor objects to the scope and manner of the correction of a condition or reason for the withholding, the higher-tiered contractor shall nevertheless pay to the lower-tiered subcontractor, along with payment to be made pursuant to the lower-tiered subcontractor’s next payment request, the amount withheld for the correction of the conditions or reasons for the withholding to which the higher-tiered contractor no longer objects.

5. Except as otherwise allowed in subsections 2, 3 and 4, a higher-tiered contractor shall not withhold from a payment to be made to a lower-tiered subcontractor more than the retention amount.

Retainage Statute on Public Projects

§ 338.515. Time for making payment; amounts paid; amounts withheld as retainage; rate of interest paid on amounts withheld; powers of Labor Commissioner when worker is owed wages

1. Except as otherwise provided in NRS 338.525, a public body and its officers or agents awarding a contract for a public work shall pay or cause to be paid to a contractor the progress payments due under the contract within 30 days after the date the public body receives the progress bill or within a shorter period if the provisions of the contract so provide. Ninety-five percent of the amount of any progress payment must be paid and 5 percent withheld as retainage until 50 percent of the work required by the contract has been performed.

2. After 50 percent of the work required by the contract has been performed, the public body may pay to the contractor:

(a) Any of the remaining progress payments without withholding additional retainage; and

(b) Any amount of any retainage that was withheld from progress payments pursuant to subsection 1, if, in the opinion of the public body, satisfactory progress is being made in the work.

3. After determining in accordance with subsection 2 whether satisfactory progress is being made in the work, the public body may pay to the contractor an amount of any retainage that was withheld from progress payments pursuant to subsection 1 if:

(a) A subcontractor has performed a portion of the work;

(b) The contractor has determined that satisfactory progress is being made in the work under the subcontract with the subcontractor pursuant to NRS 338.555;

(c) The public body determines that the portion of the work has been completed in compliance with all applicable plans and specifications;

(d) The subcontractor submits to the contractor:

(1) A release of the subcontractor’s claim for a mechanic’s lien for the portion of the work; and

(2) From each of the subcontractor’s subcontractors and suppliers who performed work or provided material for the portion of the work, a release of his or her claim for a mechanic’s lien for the portion of the work; and

(e) The amount of the retainage which the public body pays is in proportion to the portion of the work which the subcontractor has performed.

4. If, after determining in accordance with subsection 2 whether satisfactory progress is being made in the work, the public body continues to withhold retainage from remaining progress payments:

(a) If the public body does not withhold any amount pursuant to NRS 338.525:

(1) The public body may not withhold more than 2.5 percent of the amount of any progress payment; and

(2) Before withholding any amount pursuant to subparagraph (1), the public body must pay to the contractor 50 percent of the amount of any retainage that was withheld from progress payments pursuant to subsection 1; or

(b) If the public body withholds any amount pursuant to NRS 338.525:

(1) The public body may not withhold more than 5 percent of the amount of any progress payment; and

(2) The public body may continue to retain the amount of any retainage that was withheld from progress payments pursuant to subsection 1.

5. Except as otherwise provided in NRS 338.525, a public body shall identify in the contract and pay or cause to be paid to a contractor the actual cost of the supplies, materials and equipment that:

(a) Are identified in the contract;

(b) Have been delivered and stored at a location, and in the time and manner, specified in a contract by the contractor or a subcontractor or supplier for use in a public work; and

(c) Are in short supply or were specially made for the public work, within 30 days after the public body receives a progress bill from the contractor for those supplies, materials or equipment.

6. A public body shall pay or cause to be paid to the contractor at the end of each quarter interest for the quarter on any amount withheld by the public body pursuant to NRS 338.400 to 338.645, inclusive, at a rate equal to the rate quoted by at least three insured banks, credit unions, savings and loan associations or savings banks in this State as the highest rate paid on a certificate of deposit whose duration is approximately 90 days on the first day of the quarter. If the amount due to a contractor pursuant to this subsection for any quarter is less than $500, the public body may hold the interest until:

(a) The end of a subsequent quarter after which the amount of interest due is $500 or more;

(b) The end of the fourth consecutive quarter for which no interest has been paid to the contractor; or

(c) The amount withheld under the contract is due pursuant to NRS 338.520, whichever occurs first.

7. If the Labor Commissioner has reason to believe that a worker is owed wages by a contractor or subcontractor, the Labor Commissioner may require the public body to withhold from any payment due the contractor under this section and pay the Labor Commissioner instead, an amount equal to the amount the Labor Commissioner believes the contractor owes to the worker. This amount must be paid by the Labor Commissioner to the worker if the matter is resolved in the worker’s favor; otherwise it must be returned to the public body for payment to the contractor.

§ 338.555. Amounts withheld as retainage; payment of interest

1. If a public body and a contractor enter into a contract for a public work, the contractor may withhold as retainage not more than 5 percent from the amount of any progress payment due under a subcontract which is made before 50 percent of the work has been completed under the subcontract.

2. After 50 percent of the work required by the contract has been performed, the contractor shall pay any additional progress payments due under the subcontract without withholding any additional retainage if, in the opinion of the contractor, satisfactory progress is being made in the work under the subcontract, and the payment must be equal to that paid by the public body to the contractor for the work performed by the subcontractor. If the contractor continues to withhold retainage from remaining progress payments:

(a) If the contractor does not withhold any amount pursuant to NRS 338.560:

(1) The contractor may not withhold more than 2.5 percent of the amount of any progress payment; and

(2) Before withholding any amount pursuant to subparagraph (1), the contractor must pay to the subcontractor 50 percent of the amount of any retainage that was withheld from progress payments pursuant to subsection 1; or

(b) If the contractor withholds any amount pursuant to NRS 338.560:

(1) The contractor may not withhold more than 5 percent of the amount of any progress payment; and

(2) The contractor may continue to retain the amount of any retainage that was withheld from progress payments pursuant to subsection 1.

3. If the contractor receives a payment of interest earned on the retainage or an amount withheld from a progress payment, the contractor shall, within 10 days after he or she receives the money, pay to each subcontractor or supplier that portion of the interest received from the public body which is attributable to the retainage or amount withheld from a progress payment by the contractor to the subcontractor or supplier.

4. If, pursuant to subsection 3 of NRS 338.515, the public body pays to the contractor an amount of any retainage that was withheld from progress payments pursuant to subsection 1 of NRS 338.515 for the portion of the work which has been performed by the subcontractor, the contractor must pay to the subcontractor the portion of any retainage withheld by the contractor pursuant to this section for the portion of the work.

§ 338.595. Amounts withheld as retainage; payment of interest

1. If a subcontractor and another subcontractor or supplier enter into a subcontract for a public work, the subcontractor may withhold as retainage not more than 5 percent from the amount of any progress payment due under a subcontract which is made before 50 percent of the work has been completed under the subcontract.

2. After 50 percent of the work required by the subcontractor or supplier has been performed, the subcontractor shall pay any additional progress payments due under the subcontract without withholding any additional retainage if, in the opinion of the subcontractor, satisfactory progress is being made in the work under the subcontract. The payment must be equal to that paid by the contractor to the subcontractor for the work performed or supplies provided by his or her subcontractor or supplier. If the subcontractor continues to withhold retainage from remaining progress payments:

(a) If the subcontractor does not withhold any amount pursuant to NRS 338.600:

(1) The subcontractor may not withhold more than 2.5 percent of the amount of any progress payment; and

(2) Before withholding any amount pursuant to subparagraph (1), the subcontractor must pay to the subcontractor or supplier 50 percent of the amount of any retainage that was withheld from progress payments pursuant to subsection 1; or

(b) If the subcontractor withholds any amount pursuant to NRS 338.600:

(1) The subcontractor may not withhold more than 5 percent of the amount of any progress payment; and

(2) The subcontractor may continue to retain the amount of any retainage that was withheld from progress payments pursuant to subsection 1.

3. If the subcontractor receives a payment of interest earned on the retainage or an amount withheld from a progress payment, the subcontractor shall, within 10 days after receiving the money, pay to each of his or her subcontractors or suppliers that portion of the interest received from the contractor which is attributable to the retainage or amount withheld from a progress payment by the subcontractor to his or her subcontractor or supplier.

4. If, pursuant to subsection 4 of NRS 338.555, the contractor pays to the subcontractor the portion of any retainage withheld by the contractor pursuant to NRS 338.555 for the portion of the work which has been performed by the subcontractor, the subcontractor must pay to the subcontractor’s subcontractors and suppliers the portion of any retainage withheld by the subcontractor pursuant to this section for the portion of the work.

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