Utah Retainage Guide and FAQs

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Utah Retainage FAQs

Utah Retainage Overview

Utah Retainage Requirements


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Retainage 5% Icon
5% Retainage Limit

Retainage cannot exceed 5% total of the construction project price


Payment Period 45 Days Icon
45 Day Pay Period

Any retention proceeds retained or withheld from a contractor and any accrued interest shall be released pursuant to a billing statement from the contractor within 45 days from: the date the owner receives the billing statement from the contractor, the final acceptance notice being issued to the original contractor, owner, or architect, or the date the contractor accepts the final pay quantities (whichever is later). Contractors and subcontractors must release retainage to their subcontractors within 10 days of when retainage is released to them.


NO
PROCESS
There's No Process to Recover

None, other than ordinary billing requirements.


No Escrow Icon
Not Held In Escrow

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

Retainage 5% Icon
5 Percent

Retainage cannot exceed 5%. Retainage held by parties other than the public entity cannot exceed the amount retained by the public entity.


Payment Period 45 Days Icon
45 Day Pay Period

Retainage must be released within 45 days from the later of: (1) the date the public agency receives the billing statement from the contractor; or (2) the date that a certificate of occupancy or final acceptance notice is issued..


YES
PROCESS
There is a Process to Recover

Yes, the contractor must issue to the public agency a billing statement, or a certificate of occupancy or final acceptance notice must be issued to the original contractor, architect, or public agency.

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

Utah Retainage Frequently Asked Questions

Utah Retainage Private Projects FAQs

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

Maximum retainage is 5% of the total construction project price. Retainage by parties other than the owner is also limited to 5%.

How long can a party withhold retainage in Utah?

Any retention proceeds retained or withheld and any accrued interest shall be released pursuant to a billing statement from the contractor within 45 days from: the date the owner receives the billing statement from the contractor, the final acceptance notice being issued to the original contractor, owner, or architect, or the date the contractor accepts the final pay quantities (whichever is later). A contractor or subcontractor must pay a subcontractor retention owed to them within 10 days of being paid by the owner or contractor.

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

Utah law requires that retainage be placed in an interest-bearing account and accounted for separately from other amounts paid under the contract.

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

See “How long can a party withhold retainage in Utah?” above.

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

See “How long can a party withhold retainage in Utah?” above.

Please Note: Texas’ statute is very unclear on many issues involving retainage.

Utah Retainage Public Projects FAQs

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

Maximum retainage is 5% of the total construction price. Retainage by parties other than the public entity is limited to the amount retained by the public entity.

How long can a party withhold retainage in Utah?

Retainage shall be released within 45 days from the later of the date the public agency receives the billing statement from the contractor or the date that a certificate of occupancy or final acceptance notice is issued to the original contractor or public agency.

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

Withheld retainage must be retained in an interest-bearing account to the benefit of the contractor and subcontractors and must be paid after the project is accepted by the owner.

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

The contractor must issue to the public agency a billing statement, or a certificate of occupancy or final acceptance notice is issued to the original contractor, architect, or public agency.

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

See above.

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Utah Retainage
Recent Questions & Answers

In the State of Utah, is all retainage withheld, whether by owner to prime contractor or prime contractor to subcontractor, subject to the stipulation that it must be maintained in an interest bearing account?

We are an out of state prime contractor who will be performing construction services for an owner building a restaurant in the state of Utah....

Utah Retainage Statute FAQs

Getting informed about prompt payment laws is important. An examination of Utah’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. Utah’s specific laws can be found in: Utah Code Ann. § 13-8-5(3) and § 13-8-5(4); and are reproduced below.

Retainage Statute on Private Projects

§ 13-8-5(3):

(3)

(a) Notwithstanding Section 58-55-603, the retention proceeds withheld and retained from any payment due under the terms of the construction contract may not exceed 5% of the payment:

(i) by the owner or public agency to the original contractor;

(ii)  by the original contractor to any subcontractor; or

(iii) by a subcontractor.

(b) The total retention proceeds withheld may not exceed 5% of the total construction price.

(c) The percentage of the retention proceeds withheld and retained pursuant to a construction contract between the original contractor and a subcontractor or between subcontractors shall be the same retention percentage as between the owner and the original contractor if:

(i) the retention percentage in the original construction contract between an owner and the original contractor is less than 5%; or

(ii) after the original construction contract is executed but before completion of the construction contract the retention percentage is reduced to less than 5%.

§ 13-8-5(4):

(4)

(a) If any payment on a contract with a private contractor, firm, or corporation to do work for an owner or public agency is retained or withheld by the owner or the public agency, as retention proceeds, it shall be placed in an interest-bearing account and accounted for separately from other amounts paid under the contract.

(b) The interest accrued under Subsection (4)(a) shall be:

(i) for the benefit of the contractor and subcontractors; and

(ii) paid after the project is completed and accepted by the owner or the public agency.

(c) The contractor shall ensure that any interest accrued on the retainage is distributed by the contractor to subcontractors on a pro rata basis.

(d) Retention proceeds and accrued interest retained by an owner or public agency:

(i) are considered to be in a constructive trust for the benefit of the contractor and subcontractors who have earned the proceeds; and

(ii) are not subject to assignment, encumbrance, attachment, garnishment, or execution levy for the debt of any person holding the retention proceeds and accrued interest.

Retainage Statute on Public Projects

§ 13-8-5(3):

(3)

(a) Notwithstanding Section 58-55-603, the retention proceeds withheld and retained from any payment due under the terms of the construction contract may not exceed 5% of the payment:

(i) by the owner or public agency to the original contractor;

(ii)  by the original contractor to any subcontractor; or

(iii) by a subcontractor.

(b) The total retention proceeds withheld may not exceed 5% of the total construction price.

(c) The percentage of the retention proceeds withheld and retained pursuant to a construction contract between the original contractor and a subcontractor or between subcontractors shall be the same retention percentage as between the owner and the original contractor if:

(i) the retention percentage in the original construction contract between an owner and the original contractor is less than 5%; or

(ii) after the original construction contract is executed but before completion of the construction contract the retention percentage is reduced to less than 5%.

§ 13-8-5(4):

(4)

(a) If any payment on a contract with a private contractor, firm, or corporation to do work for an owner or public agency is retained or withheld by the owner or the public agency, as retention proceeds, it shall be placed in an interest-bearing account and accounted for separately from other amounts paid under the contract.

(b) The interest accrued under Subsection (4)(a) shall be:

(i) for the benefit of the contractor and subcontractors; and

(ii) paid after the project is completed and accepted by the owner or the public agency.

(c) The contractor shall ensure that any interest accrued on the retainage is distributed by the contractor to subcontractors on a pro rata basis.

(d) Retention proceeds and accrued interest retained by an owner or public agency:

(i) are considered to be in a constructive trust for the benefit of the contractor and subcontractors who have earned the proceeds; and

(ii) are not subject to assignment, encumbrance, attachment, garnishment, or execution levy for the debt of any person holding the retention proceeds and accrued interest.

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