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Retainage · Kentucky

Kentucky retainage law: 10% cap, 30-day release (2026)

By Sami 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. 2025 Ky. Acts ch. 156 (SB 76) raised the threshold for the escrow accounts KRS 371.160 requires on real estate improvement contracts from $500,000 to $2,000,000, and amended KRS 371.405 so that no provision of KRS 371.160 can be waived by contract.
Deadline
30 days
Substantial completion of the construction project.
Statute
KRS 371.410 (Kentucky Fairness in Construction Act, KRS 371.400–371.990).
What the statute says
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 (Kentucky Fairness in Construction Act, KRS 371.400–371.990). · Archived copy of the official text, captured 2026-04-10

Public work

Kentucky · Public 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.
Statute
KRS 371.410 (Kentucky Fairness in Construction Act, KRS 371.400–371.990).
What the statute says
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 (Kentucky Fairness in Construction Act, KRS 371.400–371.990). · Archived copy of the official text, captured 2026-04-10

Who this applies to

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].

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.

  1. Up to 50% complete. Withholding on each undisputed payment tops out at 10% [1]. Compare the rate written into the contract with that figure.
  2. Past 51% complete. Add up everything held so far and set it against 5% of the total contract amount [1].
  3. 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].
  4. 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].

Senate Bill 76 of 2025, Acts chapter 156, raised the threshold for the escrow accounts KRS 371.160 requires on real estate improvement contracts from $500,000 to $2,000,000, and amended KRS 371.405 so that no provision of KRS 371.160 can be waived by contract [2].

Related

Run the numbers for Kentucky

How retainage is held on each payment and when it comes back: Retainage in construction. Bill it on the pay application template, which carries retainage on work and on stored materials.

Retainage laws: other states

Sources

  1. KRS 371.410 (Kentucky Fairness in Construction Act), official PDF served by apps.legislature.ky.gov (archived copy, captured 2026-04-10)
  2. Senate Bill 76 (2025 Regular Session), bill record and summary of enacted version, Kentucky General Assembly (retrieved 2026-10-17)

Changelog

  1. : Page updated.
  2. : 1 more jurisdiction verified and published, 47 of 51 in all.
  3. : California private work corrected: Civ. Code § 8811 (SB 61) caps retention at 5% for contracts entered into on or after January 1, 2026; the row had said no cap.
  4. : Missouri private work corrected: Mo. Rev. Stat. §§ 436.300 to 436.336 cap private retainage at 10% and require release within 30 days of substantial completion; the row had said no private retainage rule.
  5. : Tennessee corrected: Tenn. Code Ann. § 66-34-203 caps owner-to-prime retainage at 5% of the contract, on public and private work; escrow applies to prime contracts of $500,000 or more, and the $300-a-day damages do not apply to public owners.
  6. : Idaho private work added: Idaho Code § 29-115 caps private retention at 5% and requires release within 35 days of final completion; the row had left private work out.
  7. : Rhode Island corrected: the 5% cap in R.I. Gen. Laws § 37-12-10.1 also covers private lienable work of $250,000 or more, and a retainage application may be submitted only 60 days after substantial completion unless the contract allows earlier.
  8. : Oklahoma public work corrected: since November 1, 2022, 61 O.S. §§ 113.1 and 226 reduce retainage to 2.5% of the amount earned to date after 50% completion with satisfactory progress, with no bond condition.
  9. : Montana public work corrected: state and local public contracts are capped at 5% under Mont. Code Ann. § 18-2-316, and final payment on building contracts is due within 30 days of final acceptance (§ 18-2-306).
  10. : Delaware public work corrected: 29 Del. C. § 6516(f)(3) requires retainage to be paid within 60 days after completion or notice of completion, with interest available from the 61st day; the row had no release deadline.
  11. : District of Columbia corrected: D.C. Code § 2-203.01 requires a 10% retent on District construction contracts until completion and acceptance, and the Private Contractor and Subcontractor Prompt Payment Act counts retainage as an undisputed amount due on its schedule; both rows had said no statute.
  12. : Colorado private work updated: HB26-1311 lets a contractor or subcontractor tender a retainage bond of up to 5% in lieu of retainage on contracts from August 12, 2026, and the owner must accept a compliant bond.
  13. : Kentucky private work updated: 2025 Ky. Acts ch. 156 raised the KRS 371.160 escrow threshold to $2,000,000 and barred waiving it by contract.
  14. : 10 more jurisdictions verified and published, 46 of 51 in all.
  15. : Page published.
  16. : Dataset first published with 36 of 51 jurisdictions verified.