Who this applies to
Kansas handles retainage through a matched pair of statutes. The Kansas Fairness in Private Construction Contract Act, K.S.A. 16-1801 and following, puts its retainage rules in K.S.A. 16-1804 [1]. The Kansas Fairness in Public Construction Contract Act, K.S.A. 16-1901 and following, does the same for public work in K.S.A. 16-1904 [2]. Each reaches the whole payment chain, from owners holding back on contractors to contractors holding back on subcontractors. The two read so closely that one set of numbers serves both; among the differences are who must release and where the interest clause sits.
What the rule says
Under both acts, retainage starts from a 5% ceiling on the value of the contract or subcontract [1] [2]. It can go higher when the owner or contractor determines that a higher rate is required to ensure performance, and 10% of the contract or subcontract value is the outer limit [1] [2]. Neither act steps the rate down as the work progresses. Once the project is substantially complete, what remains on any undisputed payment comes out within 30 days [1] [2], apart from the share tied to work still being performed.
How to comply
Private work
- Compare the contract or subcontract rate with 5% [1]. A higher figure requires a determination that it is needed to ensure performance and stops at 10% [1]. The owner may also raise retainage up to 10% if the contractor or subcontractor has not met the contract terms, is behind schedule or has workmanship problems [1].
- Subsection (i) separately caps withholding at 10% of any undisputed payment due [1].
- Date the release from substantial completion, a term defined in K.S.A. 16-1802(i) [3]. The owner releases all remaining retainage on any undisputed payment due within 30 days [1]; if a contractor or subcontractor is still working on the project, the owner may keep the part attributable to that work until 30 days after it is completed [1].
- An owner, contractor or subcontractor that fails to pay retainage owes interest at 18% a year [1], starting the first business day after the payment was due, under subsection (j).
Public work
- The same 5% [2] default and 10% [2] limit apply, on the same grounds: a higher rate required to ensure performance, or a contractor or subcontractor that has failed to meet the contract terms, fallen behind schedule or shown poor workmanship.
- Release falls to the owner, contractor or subcontractor, within 30 days [2] after substantial completion and as part of the regular payment cycle. Retainage for work still under way may be held until 30 days after that work is completed [2].
- Late retainage accrues 18% a year [2] from the first business day after it was due, under subsection (i) of the public act.
Under both acts, a contractor or subcontractor may offer alternate security in place of retainage before work starts [1] [2]; the private act's definitions in K.S.A. 16-1802 cover the term [3]. Read the section that governs your job in the Sources below alongside your own contract's retainage clause.
What changed recently
The private section was enacted as L. 2005, ch. 156, § 4 [1], and the public one as L. 2007, ch. 163, § 4 [2]. Chapter 128 of the 2010 session laws amended both, with a July 1 effective date [1] [2].
Related
- Retainage calculator: pay-application figures at Kansas's default rate or a raised one.
- Retainage laws by state: the full list of state pages.