What retainage is, in plain terms
Retainage (some people call it retention) is money the top of the chain keeps back from each payment as a safety net, to make sure the work gets finished and any snags get fixed. So if your pay application is for $10,000 and retainage is 5%, you get $9,500 now and the $500 sits held until the job's done and signed off.
It's normal, but it's your money, and on a long job the held amounts add up fast. The questions worth knowing before you sign are: how much can they keep, and when do you get it back.
The North Carolina answer depends on public or private
Public projects: capped at 5%
On public work in North Carolina worth $100,000 or more, the owner can't hold back more than 5% of any payment. That cap flows down the chain, so it sets the ceiling for what can come out of your money too.
Private projects: your contract sets the number
On private jobs there's no set legal cap. The percentage is whatever the contract says, and 10% is still common, so this is a term worth reading and pushing back on before you sign. A high retainage rate on a big job is a real chunk of cash you won't see for months.
The halfway rule on public jobs
Public projects have a break in your favour. Once the job is 50% complete and your work is satisfactory, the owner generally can't keep taking further retainage from payments, as long as any written-up defective work has been put right. In plain terms, once the job's past halfway, the held pile usually stops growing.
When retainage has to come back to you
On public jobs, held retainage is released within 60 days of the project reaching substantial completion or the owner taking beneficial occupancy (moving in and using it), with the surety's written consent.
On private jobs, release timing is set by your contract. Once the GC gets paid, though, North Carolina's prompt-payment rules still apply to what they owe you, so retainage that's come loose shouldn't sit on their desk indefinitely.
What to check before you sign
Read the retainage clause closely and look for three things: the percentage, whether it drops or stops at the halfway point, and exactly what has to happen before you get the held money back. If a private contract sets retainage higher than the owner is holding from the GC, that's worth flagging, because the law is on your side there.
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