Delaware retainage law: 5% on large public jobs, no private cap (2026)
By Oussama Chicha, EditorUpdated Checked against primary sources · not yet reviewed by a licensed professionalFact-checked
Quick answer
On large Delaware public works contracts the agency retains 5% of the value of completed work, a rate stated in the bid documents (29 Del. C. § 6962(d)(5)). At completion it may release 60% of that and holds the rest until required reports arrive, listed subcontractors are paid and final payment is authorized. For private work, 6 Del. C. § 3506 sets no cap and leaves retainage terms to the contract.
Private work
Delaware · Private workVerified 2026-09-22
Retainage cap
No statutory cap and no statutory release deadline. Delaware's Building Construction Payments chapter expressly preserves contractual retainage: 6 Del. C. § 3506(a)(3) says the required payment clause 'shall not be construed to impair the right of the owner to include in its contracts provisions which permit the owner to retain a specified percentage of each progress payment otherwise due to a contractor for satisfactory performance under the contract without incurring any obligation to incur an interest penalty, in accordance with the terms and conditions agreed to by the parties'; § 3506(d) says the same for contractor-to-subcontractor retainage and § 3507(c) repeats it. Where payment is withheld, written notice of the reason must be given within 7 days of the date payment was required.
Deadline
Not regulated for retainage specifically. The chapter's general deadlines are: owner pays the contractor within 30 days of the end of the billing period (§ 3506(a)(1)); if the contract is silent, the owner pays all undisputed amounts within 30 days after the end of the billing period or 30 days after delivery of the invoice, whichever is later (§ 3507(c)); and a general, prime or subcontractor pays undisputed amounts owed to its subcontractors and suppliers within 15 days after receiving each payment (§ 3507(d)).
The clause required by this subsection shall not be construed to impair the right of the owner to include in its contracts provisions which permit the owner to retain a specified percentage of each progress payment otherwise due to a contractor for satisfactory performance under the contract without incurring any obligation to incur an interest penalty, in accordance with the terms and conditions agreed to by the parties to the contract.
6 Del. C. § 3506; § 3507. · Official text · retrieved 2026-09-22
Public work
Delaware · Public workVerified 2026-09-22
Retainage cap
5%
29 Del. C. § 6962(d)(5)a.1 (large public works contracts): 'The percentage retained shall be 5% of the value of the work completed by the contractor under the contract.' The percentage must be stated in the bidding documents and incorporated into the contract. The agency may at its option retain only a small amount and pay out portions it deems equitable (§ 6962(d)(5)a.2), and may forfeit all or part of retainage if the contractor causes delay past the scheduled completion date (§ 6962(d)(5)a.3). A separate DelDOT rule at § 6962(c)(12)c.2.B lets a contractor below the minimum performance rating bid if it accepts variable retainage not exceeding 5%.
Deadline
On completion of the work under the contract the agency may release 60% of the amount then retained; the balance is held until all reports required by the contract are received, all subcontractors in trades listed on the bid form are paid (the agency may withhold 150% of a disputed amount), and final payment is authorized by the agency.
Agencies may retain a portion of the payments to be made to a contractor for work performed pursuant to a public works contract. … The percentage retained shall be 5% of the value of the work completed by the contractor under the contract. Upon completion of the work under the contract, the agency may release 60% of the amount then retained.
29 Del. C. § 6962(d)(5). · Official text · retrieved 2026-09-22
Who this applies to
On the public side, the rule is written for large public works contracts let by Delaware agencies under § 6962 of title 29 [2]. The percentage has to appear in the bidding documents and be incorporated into the contract [2]. DelDOT work adds one variation: a contractor rated below the minimum performance rating can still bid if it accepts variable retainage of no more than 5% [2].
On the private side, the Building Construction Payments chapter of title 6 [1] sets payment rules for owners, contractors and subcontractors but keeps its hands off retainage percentages. It preserves the owner's right to write a retained percentage of each progress payment into its contracts, and a contractor's right to do the same with its subcontractors [1].
What the rule says
Delaware names a public rate and leaves the private one open. On a large public works contract, the agency's retainage is 5% of the value of the work the contractor has completed [2], though the agency may choose to retain only a small amount instead and pay out portions it considers equitable [2]. For private work there is no statutory cap and no statutory release date for retainage; what the chapter adds is a frame of notice, interest and fee rules around any withheld payment.
How to comply
Public contracts
Find the percentage in the bid documents and compare it with the 5% [2] the statute sets.
Keep the schedule in view: a contractor that causes delay past the scheduled completion date can have all or part of its retainage forfeited [2].
At completion, the agency may release 60% [2] of what it then holds.
The balance waits for three things: every report the contract requires, payment of all subcontractors in trades listed on the bid form (the agency may withhold 150% [2] of a disputed amount), and the agency's authorization of final payment. Section 6962(d)(5) ties the balance to those conditions rather than to a number of days [2]; for any timing beyond them, the contract and a lawyer are the place to look.
Cash is not the only option. The contractor may substitute Treasury securities, Delaware bonds, certificates of deposit or a letter of credit for retained money [2].
On DelDOT's variable-retainage track, a contractor can ask at 50% [2] completion for the retainage to be reduced to 2% [2] after an interim evaluation; completion is measured by actual work completed, not counting money paid for stored materials.
Private contracts
The retained percentage and its release are whatever the contract says. Around that, the chapter sets these rules:
The owner pays the contractor within 30 days [1] of the end of the billing period. Where the contract is silent, undisputed amounts are due 30 days after the billing period ends or 30 days after the invoice is delivered, whichever is later [1].
Where the contract is silent, a general contractor, prime contractor or subcontractor pays undisputed amounts owed to its own subcontractors and suppliers within 15 days [1] of receiving each payment.
Withholding a payment requires written notice of the reason within 7 days [1] of the date the payment was required.
Late payments draw an interest penalty from the day after the required date, at the legal rate in effect when the obligation accrues, with unpaid interest added to principal every 30 days [1].
Retainage held under the contract carries no interest penalty. If a court finds it was not withheld in good faith for reasonable cause, it may award reasonable attorney's fees to the prevailing party [1].
What changed recently
The private payment rules trace to chapter 420 of volume 70 of the Laws of Delaware, amended by chapter 134 of volume 71 and chapter 357 of volume 74 [1].
Related
Retainage calculator: works out a pay application at the agency's rate or the contract's.
