By Oussama Chicha, EditorUpdated Checked against primary sources · not yet reviewed by a licensed professionalFact-checked
Quick answer
KRS 371.410, in Kentucky's Fairness in Construction Act, sets the same retainage limits for private and public projects. A contracting entity, contractor or subcontractor may withhold no more than 10% of an undisputed payment until the project is 50% complete; after 51% completion, retainage held may not exceed 5% of the total contract amount. Retainage is released within 30 days after substantial completion.
Private work
Kentucky · Private workVerified 2026-09-22
Retainage cap
10%
KRS 371.410: a contracting entity, contractor or subcontractor may withhold no more than 10% retainage until the construction project is 50% complete, and retainage held after 51% completion may not exceed 5% of the total contract amount. On release the payer may hold back 200% of the estimated cost of the remaining work, and retainage received must be passed down within 15 business days.
Deadline
30 days
Substantial completion of the construction project.
until fifty percent (50%) of the construction project has been completed ... a contracting entity, contractor, or subcontractor may withhold no more than ten percent (10%) retainage from the amount of any undisputed payment due, and retainage held after fifty-one percent (51%) of the construction project has been completed shall not be more than five percent (5%) of the total contract amount.
KRS 371.410: a contracting entity, contractor or subcontractor may withhold no more than 10% retainage until the construction project is 50% complete, and retainage held after 51% completion may not exceed 5% of the total contract amount. On release the payer may hold back 200% of the estimated cost of the remaining work, and retainage received must be passed down within 15 business days.
Deadline
30 days
Substantial completion of the construction project.
until fifty percent (50%) of the construction project has been completed ... a contracting entity, contractor, or subcontractor may withhold no more than ten percent (10%) retainage from the amount of any undisputed payment due, and retainage held after fifty-one percent (51%) of the construction project has been completed shall not be more than five percent (5%) of the total contract amount.
In Kentucky, one section of the Fairness in Construction Act, KRS 371.410, supplies the retainage limits for private jobs and public jobs alike [1]. Those limits bind every level that holds money back: a contracting entity paying its contractor, a contractor paying a subcontractor, and a subcontractor paying the tier below it [1].
Private work. No more than 10% retainage until the project is 50% complete [1], and no more than 5% of the total contract amount once it is past 51% [1].
Public work. The identical ceilings come from the same section, and so does the release deadline: within 30 days after substantial completion [1].
What the rule says
Two different yardsticks apply, depending on how far along the project is. In the first half of the job, the cap is 10% of any undisputed payment due, so the limit is measured payment by payment [1]. After 51% completion the question becomes how much is being held in total, and that total may not exceed 5% of the total contract amount [1]. The money comes back within 30 days after substantial completion [1], although at that point the payer may hold back 200% of the estimated cost of the work that remains [1]. Retainage does not stall at the top tier either: once received, it must be passed down within 15 business days [1].
How to comply
Read the retainage clause in your contract against the statute one stage at a time.
Up to 50% complete. Withholding on each undisputed payment tops out at 10% [1]. Compare the rate written into the contract with that figure.
Past 51% complete. Add up everything held so far and set it against 5% of the total contract amount [1].
Substantial completion. Note the date, because release falls due within 30 days after it [1]. Check any hold-back for unfinished work against the section's figure: on release, the payer may hold back 200% of the estimated cost of the remaining work [1].
Passing it down. A contractor or subcontractor that receives retainage has 15 business days to move it to the next tier [1].
The Act spans KRS 371.400 to 371.990 [1]. Confirm that your project falls within it, and read section 371.410 in the Sources below next to your own contract before relying on this summary.
What changed recently
Kentucky's 2007 Acts, chapter 136, section 3, created KRS 371.410, which took effect on June 26, 2007 [1].
Related
Retainage calculator, which has a step-down setting for a rate that changes at a completion threshold.
