HB26-1311 • 2026

Retainage Surety Bond Construction Contracts

Under current law, a property owner is prohibited from retaining more than 5% of a construction contract as retainage if the contract is at least $150,000. The bill authorizes a contractor to submit a

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor: Rep. M. Carter, Rep. M. Duran, Sen. S. Bright, Sen. M. Snyder, Rep. R. Gonzalez, Rep. B. Titone, Sen. J. Amabile, Sen. A. Benavidez, Sen. J. Coleman, Sen. L. Cutter, Sen. T. Exum, Sen. L. Frizell, Sen. J. Gonzales, Sen. I. Jodeh, Sen. C. Kipp, Sen. C. Kolker, Sen. R. Rodriguez, Sen. K. Wallace
Last action: 2026-04-07
Official status: Senate Third Reading Passed - No Amendments
Effective date: Not listed

Plain English Breakdown

The bill summary does not specify the exact conditions under which a surety bond must be accepted or what happens if a contractor fails to provide an acceptable bond.

Construction Contracts and Retainage Bonds

This bill allows contractors and subcontractors to submit surety bonds in place of withholding retainage from construction contracts over $150,000 if the bond meets specific requirements.

What This Bill Does

Allows a contractor or subcontractor to provide a surety bond instead of retaining money (retainage) from a construction contract if the bond meets certain standards.
Requires property owners and contractors to accept these bonds as long as they meet the bill's criteria, releasing the retainage amount covered by the bond.
Permits subcontractors to require contractors to submit a similar bond for their portion of the retainage.

Who It Names or Affects

Contractors and subcontractors involved in construction contracts over $150,000.
Property owners who enter into these construction contracts.

Terms To Know

Retainage: A portion of the contract price that is withheld by a property owner until certain conditions are met or work is completed satisfactorily.
Surety Bond: An agreement where one party (the surety) guarantees payment to another party if the first party fails to meet their obligations under a contract.

Limits and Unknowns

The bill does not specify what happens if a contractor or subcontractor fails to provide an acceptable bond.
Public entities are exempt from this requirement, including contracts resulting from public-private partnerships.

Amendments

These notes stay tied to the official amendment files and metadata from the legislature.

L.002

Second Reading

Passed [**]

Plain English: The amendment adds an exception to the retainage rule for contracts or subcontracts involving property owned by a public entity, including those from public-private partnerships.

Adds an exemption in the law that allows public entities to retain more than 5% of construction contract payments as retainage.

The amendment does not specify how much over 5% can be retained by public entities, leaving this detail undefined.
It is unclear what specific conditions or limitations apply to the exemption for public-private partnerships beyond the general exclusion from the retainage limit.

Bill History

2026-04-07 Senate
Senate Third Reading Passed - No Amendments
2026-04-06 Senate
Senate Second Reading Passed - No Amendments
2026-03-31 Senate
Senate Committee on Finance Refer Unamended to Senate Committee of the Whole
2026-03-25 Senate
Introduced In Senate - Assigned to Finance
2026-03-23 House
House Third Reading Passed - No Amendments
2026-03-20 House
House Second Reading Special Order - Passed with Amendments - Floor
2026-03-18 House
House Committee on Business Affairs & Labor Refer Unamended to House Committee of the Whole
2026-03-02 House
Introduced In House - Assigned to Business Affairs & Labor

Official Summary Text

Under current law, a property owner is prohibited from retaining more than 5% of a construction contract as retainage if the contract is at least $150,000. The bill authorizes a contractor to submit a surety bond in lieu of withholding retainage, and the property owner must accept the bond and not withhold the retainage if the bond meets the bill's standards. A subcontractor may require the contractor to submit a bond in lieu of retainage for the subcontractor's portion of the retainage. The contractor may require the subcontractor to submit a like bond to the contractor.
(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)

Current Bill Text

Read the full stored bill text

Second Regular Session
Seventy-fifth General Assembly
STATE OF COLORADO
REREVISED
This Version Includes All Amendments
Adopted in the Second House
LLS NO. 26-0250.01 Jery Payne x2157 HOUSE BILL 26-1311
House Committees Senate Committees
Business Affairs & Labor Finance
A BILL FOR AN ACT
CONCERNING THE USE OF A BOND IN LIEU OF RETAINAGE IN101
CONSTRUCTION CONTRACTS.102
Bill Summary
(Note: This summary applies to this bill as introduced and does
not reflect any amendments that may be subsequently adopted. If this bill
passes third reading in the house of introduction, a bill summary that
applies to the reengrossed version of this bill w ill be available at
http://leg.colorado.gov.)
Under current law, a property owner is prohibited from retaining
more than 5% of a construction contract as retainage if the contract is at
least $150,000. The bill authorizes a contractor to submit a surety bond
in lieu of withholding retainage, and the property owner must accept the
bond and not withhold the retainage if the bond meets the bill's standards.
SENATE
3rd Reading Unamended
April 7, 2026
SENATE
2nd Reading Unamended
April 6, 2026
HOUSE
3rd Reading Unamended
March 23, 2026
HOUSE
Amended 2nd Reading
March 20, 2026
HOUSE SPONSORSHIP
Duran and Carter, Gonzalez R., Titone
SENATE SPONSORSHIP
Bright and Snyder, Amabile, Benavidez, Coleman, Cutter, Exum, Frizell, Gonzales J.,
Jodeh, Kipp, Kolker, Rodriguez, Wallace
Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
Capital letters or bold & italic numbers indicate new material to be added to existing law.
Dashes through the words or numbers indicate deletions from existing law.
A subcontractor may require the contractor to submit a bond in lieu of
retainage for the subcontractor's portion of the retainage. The contractor
may require the subcontractor to submit a like bond to the contractor.
Be it enacted by the General Assembly of the State of Colorado:1
SECTION 1. In Colorado Revised Statutes, 38-46-101, add (2.5)2
and (4.5) as follows:3
38-46-101. Definitions.4
As used in this article 46, unless the context otherwise requires:5
(2.5) "LIKE BOND" MEANS A RETAINAGE BOND SUBMITTED BY A6
SUBCONTRACTOR TO A CONTRACTOR OR SUBCONTRACTOR THAT IS7
SUBSTANTIALLY EQUIVALENT TO THE RETAINAGE BOND SUBMITTED BY8
THE CONTRACTOR OR SUBCONTRACTOR TO THE PROPERTY OWNER OR9
CONTRACTOR.10
(4.5) "RETAINAGE BOND" MEANS A SURETY BOND THAT IS ISSUED11
BY AN INSURER LICENSED TO ISSUE THE BOND IN COLORADO AS12
ASSURANCE FOR THE PERSON ACCEPTING THE BOND THAT:13
(a) A CONTRACT OR SUBCONTRACT WILL BE SATISFACTORILY14
COMPLETED; OR15
(b) T HE GOODS , MATERIALS , OR EQUIPMENT MEETS THE16
SPECIFICATIONS NECESSARY FOR SATISFACTORY PERFORMANCE OF A17
CONTRACT OR SUBCONTRACT.18
SECTION 2. In Colorado Revised Statutes, 38-46-103, amend19
(1) as follows:20
38-46-103. Private construction contracts - retainage -21
conditions precedent.22
(1) (a) A property owner, contractor, or subcontractor shall not23
withhold as retainage more than five percent of the price of the work24
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completed under the contract or subcontract. Making a partial payment1
under this subsection (1) is not acceptance or approval of some of the2
work or of a waiver of defects in the work.3
(b) (I) IN LIEU OF RETAINAGE, A SUBCONTRACTOR OR CONTRACTOR4
MAY TENDER A RETAINAGE BOND IN AN AMOUNT NOT TO EXCEED FIVE5
PERCENT OF THE MONEY EARNED BY THE SUBCONTRACTOR OR6
CONTRACTOR. IF THE CONTRACTOR OR SUBCONTRACTOR TENDERS A7
RETAINAGE BOND MEETING THE REQUIREMENTS OF SUBSECTIONS (1)(b)(II)8
AND (1)(b)(III) OF THIS SECTION, THE PROPERTY OWNER, CONTRACTOR, OR9
SUBCONTRACTOR SHALL ACCEPT THE RETAINAGE BOND AND RELEASE THE10
RETAINAGE COVERED BY THE RETAINAGE BOND.11
(II) TO COMPLY WITH SUBSECTION (1)(b)(I) OF THIS SECTION, THE12
CONTRACTOR OR SUBCONTRACTOR MUST PROVIDE A RETAINAGE BOND13
MEETING THE REQUIREMENTS OF SUBSECTION (1)(b)(III) OF THIS SECTION14
AND MUST:15
(A) FAITHFULLY PERFORM ALL THE PROVISIONS OF THE CONTRACT16
OR SUBCONTRACT; AND17
(B) P AY ALL LABORERS , SUPPLIERS , AND SUBCONTRACTORS18
AMOUNTS OWED UNDER THE CONTRACT OR SUBCONTRACT.19
(III) THE PROPERTY OWNER OR CONTRACTOR MAY REQUIRE THAT20
THE AUTHORIZED SURETY HAVE A MINIMUM A.M. BEST, OR A SUCCESSOR21
INSTITUTION, FINANCIAL STRENGTH RATING, SO LONG AS THE REQUIRED22
MINIMUM RATING DOES NOT EXCEED "A-". THE CONTRACTOR MAY23
WITHHOLD THE SUBCONTRACTOR'S PORTION OF THE BOND PREMIUM , TO24
THE EXTENT THE CONTRACTOR PROVIDES A RETAINAGE BOND TO OBTAIN25
A RELEASE OF THE SUBCONTRACTOR'S RETAINAGE.26
(IV) T HE CONTRACTOR OR PROPERTY OWNER MUST ACCEPT A27
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BOND MEETING THE REQUIREMENTS OF SUBSECTION (1)(b)(III) OF THIS1
SECTION. THE SUBCONTRACTOR 'S OR CONTRACTOR 'S BOND AND THE2
PROCEEDS FROM THE BOND ARE SUBJECT TO A CLAIM AND LIEN IN THE3
SAME MANNER AND PRIORITY AS SET FORTH IN ARTICLE 22 OF THIS TITLE4
38.5
(V) W HEN A PROPERTY OWNER ACCEPTS A BOND IN LIEU OF6
RETAINAGE FROM A CONTRACTOR, THE CONTRACTOR MUST ACCEPT A LIKE7
BOND FROM ANY SUBCONTRACTOR THAT SUBMITS A BOND IN LIEU OF8
RETAINAGE UNDER THIS SUBSECTION (1)(b).9
(VI) THIS SUBSECTION (1)(b) DOES NOT APPLY TO A CONTRACT OR10
SUBCONTRACT THAT CONCERNS PROPERTY OWNED BY A PUBLIC ENTITY .11
THE EXEMPTION DESCRIBED IN THIS SUBSECTION (1)(b)(VI) INCLUDES A12
CONTRACT OR SUBCONTRACT THAT RESULTS FROM A PUBLIC -PRIVATE13
PARTNERSHIP.14
SECTION 3. Act subject to petition - effective date -15
applicability. (1) This act takes effect at 12:01 a.m. on the day following16
the expiration of the ninety-day period after final adjournment of the17
general assembly (August 12, 2026, if adjournment sine die is on May 13,18
2026); except that, if a referendum petition is filed pursuant to section 119
(3) of article V of the state constitution against this act or an item, section,20
or part of this act within such period, then the act, item, section, or part21
will not take effect unless approved by the people at the general election22
to be held in November 2026 and, in such case, will take effect on the23
date of the official declaration of the vote thereon by the governor.24
(2) This act applies to contracts created on or after the applicable25
effective date of this act.26
1311-4-