Private works of improvement: retention payments.

Plain English Breakdown

Checked against official source text during the last sync.

Private Construction Projects: Limiting Retention Payments

This law sets a limit on how much money can be held back from contractors and subcontractors in private construction projects.

What This Bill Does

• Limits the amount of retention payments that an owner, contractor, or subcontractor can withhold to no more than 5% of each payment.
• Requires owners to pay retained amounts within 45 days after completing a project.
• Allows courts to award reasonable attorney’s fees to the prevailing party in disputes over these rules.

Who It Names or Affects

• Owners who contract for private construction projects
• Contractors working on private construction projects
• Subcontractors hired by contractors

Terms To Know

Retention payment

Money held back from a contractor or subcontractor until certain conditions are met, like completing the work.

Prevailing party

The person or company that wins in a legal dispute over retention payments.

Limits and Unknowns

• Does not specify what happens if there is an exception to the 5% limit.
• Does not provide details on how disputes are resolved outside of court.

Official Summary Text

SB 61, Cortese.
Private works of improvement: retention payments.
Existing law generally governs retention payments withheld with respect to a contract for a private work of improvement, including by requiring an owner that withholds a retention from a direct contractor to, within 45 days after completion of the work of improvement, pay the retention to the contractor.
With respect to a contract for a private work of improvement, this bill would limit the amount of a retention payment by, among other things, prohibiting a retention payment withheld from a payment by an owner from the direct contractor, by the direct contractor from any subcontractor, and by a subcontractor from any subcontractor thereunder, from exceeding 5% of the payment, subject to certain exceptions. The bill would require a court to award reasonable attorney’s fees to the prevailing party in any action to enforce these
provisions.

Current Bill Text

Download Bill PDF