Connecticut retainage law: 5% private cap, 30-day release (2026)

By Oussama Chicha, EditorUpdated September 23, 2026Checked against primary sources · not yet reviewed by a licensed professionalFact-checked September 23, 2026

Quick answer

Connecticut caps private retainage at 5% of a progress payment (Conn. Gen. Stat. § 42-158k), except on HUD projects, residential buildings of up to four units and owner contracts of $25,000 or less; the owner pays it within 30 days of a final-completion certificate or written acceptance. Bonded public work (§ 49-41b) caps it at 7.5% for state agencies (5% after 50% completion), 2.5% for DOT, 5% for municipalities.

Private work

Connecticut · Private workVerified 2026-09-22

Retainage cap: 5%; Conn. Gen. Stat. § 42-158k: 'No construction contract may provide for any retainage in an amount that exceeds five per cent of the estimated amount of a progress payment for the life of the construction project.' 'Construction contract' (§ 42-158i(2)) excludes public works or other building contracts with this state, the United States, any other state, or any municipality or political subdivision; projects funded or insured by HUD; owner-contractor contracts of $25,000 or less and subcontracts resulting from them; and contracts for a building intended for residential occupancy containing four or fewer units.
Deadline: 30 days; All retainage must be paid by the owner not later than 30 days after issuance of a certificate of final completion by the owner or the owner's authorized representative, or not later than 30 days after the equivalent written acceptance of the construction project work by the owner.
Statute: Conn. Gen. Stat. § 42-158k.

What the statute says

No construction contract may provide for any retainage in an amount that exceeds five per cent of the estimated amount of a progress payment for the life of the construction project.

Conn. Gen. Stat. § 42-158k. · Archived copy of the official text, captured 2025-11-27

Public work

Connecticut · Public workVerified 2026-09-22

Retainage cap: 7.5%; Conn. Gen. Stat. § 49-41b applies where a payment bond is required by § 49-41 and the contract requires a performance bond in the full contract price. Three regimes: (1) contracts advertised by the Department of Administrative Services or any other state agency: the awarding authority may not withhold more than 7.5 percent, reduced to 5 percent when 50 percent of the contract is completed, and the prime may not withhold from a subcontractor more than 7.5 percent or the amount withheld from the prime, whichever is less, also reduced to 5 percent at 50 percent completion; (2) contracts advertised by the state Department of Transportation: not more than 2.5 percent, at both tiers; (3) municipal awarding authorities: not more than 5 percent, at both tiers.
Deadline: 90 days; Section 49-41b sets the 50 percent-completion reduction and its 90-day payment deadline; it does not itself fix a deadline for final release of the remaining retainage.
Statute: Conn. Gen. Stat. § 49-41b.

What the statute says

the awarding authority shall not withhold more than seven and one-half per cent from any periodic or final payment which is otherwise properly due to the general or prime contractor under the terms of such contract, provided, when fifty per cent of the contract is completed, said amount shall be reduced to five per cent

Conn. Gen. Stat. § 49-41b. · Archived copy of the official text, captured 2026-06-15

Who this applies to

Private work. The limit in § 42-158k reaches every "construction contract" as chapter 742b defines the term ^[1], including the subcontracts on a covered project. The definition leaves out:

public works or other building contracts with Connecticut, the United States, another state, or a municipality or political subdivision;
projects funded or insured by HUD;
owner-contractor contracts of $25,000 or less ^[1], and the subcontracts that result from them;
contracts for a building intended for residential occupancy with four or fewer units ^[1].

Public work. Section 49-41b governs where § 49-41 requires a payment bond and the contract calls for a performance bond in the full contract price ^[2]. Its caps bind the awarding authority and, one tier down, the general or prime contractor in what it holds from subcontractors.

What the rule says

Connecticut regulates the private side end to end and the public side by who is paying. A private construction contract may not provide for retainage above 5% ^[1] of the estimated amount of a progress payment, for the life of the project, and the owner owes all of it within 30 days ^[1] of certifying final completion or accepting the work in writing. Bonded public work has three caps, set by who awards the contract.

How to comply

Private contracts

Measure the retainage clause against 5% ^[1] of each progress payment's estimated amount.
Start the 30-day ^[1] clock when the owner, or its authorized representative, issues the certificate of final completion, or when the owner accepts the work in an equivalent writing.
If payment does not come, the claim is served by registered or certified mail. Ten days later the payer owes interest at 1% per month ^[1] from its receipt of the notice and, on written demand, must put the claimed amount plus that interest in an interest-bearing escrow account at a Connecticut bank. An unreasonable refusal to escrow brings attorneys' fees on top of the payment and interest; bad-faith withholding adds 10% damages ^[1].
In an action to enforce § 42-158k, a court may award court costs and reasonable attorney's fees to the prevailing party ^[1].
Chapter 742b also has sections on retainage escrow accounts, § 42-158p, and on exclusions from escrow, § 42-158q ^[1].

Public contracts

The cap turns on who advertised the contract ^[2]:

Department of Administrative Services or another state agency. No more than 7.5% ^[2] withheld from the general or prime contractor, reduced to 5% once the contract is 50% complete ^[2]. The prime may withhold from a subcontractor no more than 7.5% or what is being withheld from the prime, whichever is less, with the same drop to 5% at the halfway mark ^[2].
State Department of Transportation. No more than 2.5% ^[2], at both tiers.
Municipal awarding authorities. No more than 5% ^[2], at both tiers.

On state agency contracts the reduction is payable within 90 days after a complete application for payment showing 50% completion is submitted ^[2], and the awarding authority must run an early release program for periodic payments from primes to subcontractors. Section 49-41b does not itself fix a deadline for releasing the rest of the retainage ^[2]; the contract and a lawyer answer that question.

A general contractor or subcontractor that fails to pay as required, after notice by registered or certified mail, owes 1% per month ^[2] from ten days later, must escrow the claim plus 1% ^[2] in a Connecticut bank on written demand, and pays the claimant's attorney's fees if it refuses to escrow and the claimant is found to have substantially performed.

What changed recently

P.A. 10-148 cut the private cap from 7.5% to 5% ^[1], and P.A. 17-182 added the owner-payment provision effective July 1, 2017 ^[1]. The public section, § 49-41b, dates to P.A. 77-306, and its most recent listed amendment is P.A. 16-104 ^[2].

Retainage calculator: pay-application math with a step-down option.
Retainage laws by state: the state-by-state index.