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Retainage in North Carolina Public Construction Projects


In public construction projects, subcontractors occasionally have trouble receiving payment from general contractors who blame a failure to pay on the amount of retainage retained by the owner. Retainage is payment withheld on work that has already been satisfactorily completed and accepted by the owner/prime contractor and does not apply to work that has not been completed properly. North Carolina law protects contractors from aggressive withholding of funds due and owing through retainage.

In North Carolina, retainage on public construction projects is capped at 5% and, unless there are issues regarding performance of the contractor, retained is generally prohibited after the work is more than 50% complete (as judged by the amount of money that has been invoiced by the contractor, with some limitations based on the amount of invoices based on materials). Improperly withheld retainage can be recovered at an interest rate of 12%.

Early finishing subcontractors, such as those dealing with structural issues can have their retainage reduced to 0.5% upon receipt of written certification from the general contractor that the work has been completed properly. Subcontractors, this means that upon completion of your task, get written certification from the prime contractor that the work is complete and done properly. There is generally no retainage allowed for projects with a contract value under $100,000.

It’s important to note that funds can still be withheld for defective or incomplete performance by subcontractors. If an owner or prime contractor is withholding funds improperly due to retainage or improper concerns about the quality of work completed, contact Maginnis Law, PLLC to schedule a consultation. Maginnis Law, PLLC is a Raleigh civil litigation firm with construction law attorneys able to take cases in Cary, Morrisville, Apex, Durham, and the rest of the Wake County and Triangle areas. Contact the firm at 919.526.0450 or visit our website at www.maginnislaw.com. To submit a request to the firm via web, you can submit at www.maginnislaw.com/contact.

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