South Dakota Retainage Guide and FAQs

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South Dakota Retainage FAQs

South Dakota Retainage Overview

South Dakota Retainage Requirements


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Retainage Unregulated Icon
Retainage Limit

Not Regulated by State Law


Payment Period Not Regulated Icon
Pay Period

Not Regulated by State Law


NO
PROCESS
There's No Process to Recover

Not specified


No Escrow Icon
Not Held In Escrow

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

12%
12 Percent

Contracts less than $50,000 cannot have retainage less than 12%. For projects between $50,000 and $250,000, retainage shall not be less than 12% on the first $50,000 and 5% on the next $200,000. For projects over $250,000, retainage shall not be less than 12% on the first $50,000, 5% on the next $200,000, and 2.5% on the remaining contract amount.


Payment Period 60 Days Icon
60 Day Pay Period

Payment is due 60 days after completion of the work.


YES
PROCESS
There is a Process to Recover

Acceptance required by superintendent or architect.

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

South Dakota Retainage Frequently Asked Questions

South Dakota Retainage Private Projects FAQs

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

This is not outlined for private projects in the South Dakota retainage statute.

How long can a party withhold retainage in South Dakota?

This is not outlined for private projects in the South Dakota retainage statute.

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

This is not outlined for private projects in the South Dakota retainage statute.

How can I make a claim to recover retainage in South Dakota?

This is not outlined for private projects in the South Dakota retainage statute.

Is there a specific notice required to recover retainage in South Dakota?

This is not outlined for private projects in the South Dakota retainage statute.

South Dakota Retainage Public Projects FAQs

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

For county projects, retainage is on a sliding scale based on contract amount.  Contracts less than $50,000 cannot have retainage less than 12%. For projects between $50,000 and $250,000, retainage shall not be less than 12% on the first $50,000 and 5% on the next $200,000. For projects over $250,000, retainage shall not be less than 12% on the first $50,000, 5% on the next $200,000, and 2.5% on the remaining contract amount.

How long can a party withhold retainage in South Dakota?

Payment due 60 days after the work under the contract has been completed.

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

This is not specified for public projects in the South Dakota retainage statute.

How can I make a claim to recover retainage in South Dakota?

Completion date is either established in superintendent’s or architect’s letter of acceptance or by the use and occupancy of the building.

Is there a specific notice required to recover retainage in South Dakota?

See above.

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South Dakota Retainage Statute FAQs

Getting informed about prompt payment laws is important. An examination of South Dakota’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. South Dakota’s specific laws can be found in: S.D. Codified Laws § 7-25-10; and are reproduced below.

Retainage Statute on Private Projects

N/A

South Dakota does not provide a specific retainage statute for private projects.

Retainage Statute on Public Projects

§ 7-25-10: Lowest Responsible Bid Accepted; Progress Payments Authorized; Retention of Payment; Interest on Amounts Retained

The lowest responsible bid in all cases shall be accepted and the contract for the building or buildings may permit progress payments, but if so shall provide for retention of not less than the following percentages: twelve percent of the amount of the contract up to fifty thousand dollars; five percent of the next two hundred thousand dollars of the amount of the contract and two and one-half percent of the amount of the contract in excess of two hundred fifty thousand dollars until the contract is fully executed and the building or buildings completed to the satisfaction and acceptance of the board of county commissioners. However, if the contractor has furnished the board all required records and reports and a final inspection has been made, the board shall pay to the contractor interest at the Category A rate of interest as established in § 54-3-16 on the amounts retained and on the final payment due the contractor beginning sixty days after the work under the contract has been completed, as evidenced either by the completion date established in the superintendent’s or architect’s letter of acceptance or by the use and occupancy of the building, and running until the date when payment is tendered to the contractor unless delay in payment has been the result of federal participation in such contract, in which event interest may not begin until sixty days after payment by the federal authority involved.

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