Retainage & Withholding Risk Checker in New York Construction Contracts
Retainage is money withheld from every progress payment (typically 5–10%) until final completion. Excessive or slow-released retainage strangles subcontractor cash flow — many states now cap retainage by statute.
Public: 5%. Private: no cap, but Prompt Payment Act triggers interest on late release.
New York State Finance Law §139-f — 5% retainage on public; Prompt Payment Act on private
Typical exposure per project when a Retainage clause slips into a signed contract.
NY State Finance Law limits public-project retainage. On private, use interest triggers to force timely release.
The NY Prompt Payment Act (Article 3-A) forces interest on late retainage — enforceable even against a defaulting GC.
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The clause we flag — and the one we help you write instead.
“Contractor may withhold ten percent (10%) of each progress payment as retainage, to be released in full only upon Contractor's receipt of final payment and closeout of all subcontracts on the Project.”
“Contractor shall withhold five percent (5%) of each progress payment as retainage. Retainage shall be reduced to two and one-half percent (2.5%) upon fifty percent (50%) completion. Subcontractor's retainage shall be released within thirty (30) days of Subcontractor's substantial completion of its scope, independent of other subcontracts on the Project.”
- 1Push for early retainage reduction at 50% completion.
- 2Separate your retainage release from other subs — don't be held hostage to a slow-poke.
- 3Verify state statutory retainage caps — public projects often have stricter limits.
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