Retainage fees changing on public projects

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Florida lawmakers have unanimously passed a bill to limit the amount of retainage that can be withheld from contractor payments on state and local publicly funded projects to 5 percent. If Florida Gov. Ron DeSantis signs the legislation, the new law will go into effect Oct. 1, 2020.

Currently, contractors working on public projects have 10 percent retainage withheld from their payments until 50 percent of the project is complete. Then, the retainage rate drops to 5 percent. In addition to limiting how much retainage public entities are allowed to withhold, the new law will also require general contractors to limit retainage on subcontractor payments to 5 percent.

New rules will not apply to projects valued at $200,000 or less; Florida DOT projects approved under Florida Statutes Ch. 337; or projects entered into, pending approval or advertised by a government entity on or before Oct. 1, 2020. FDOT withholds a maximum of 10% retainage if the contractor fails to start a project in a timely manner or falls behind schedule on a project with flexible start and completion times.​

The state of Florida established the current rate of retainage in 2005.

Regulations don’t prevent a public entity in Florida from holding retainage at a lower rate and including a customized retainage release schedule in contracts or subcontracts or to prevent early-work contractors from negotiating the accelerated payment of retainage.

The owner must pay retainage and any final payments within 30 days of substantial completion for projects up to $10 million and within 60 days for those those valued at more than $10 million.

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