Who this applies to
Maine handles retainage through two statutes that overlap on public work.
Chapter 201-A of Title 10 (Construction Contracts) reaches any construction contract for work on real property [3]. It leaves out contracts entered into by the Department of Transportation [3], and a person buying materials for work on their own real property [5]. Private owners are covered, and so are public ones: the chapter's definition of "owner" in § 1111(6) expressly includes the State, municipalities, school districts and school administrative districts [9].
5 M.R.S. § 1746 adds a withholding figure for one group of public jobs, State public improvement contracts [7].
What the rule says
On private work, chapter 201-A regulates timing rather than amount: it sets no percentage ceiling on retainage and controls only how quickly retained money has to be paid out [8]. On State public improvement contracts a percentage does apply, because the State withholds 5% of the money due the contractor until the project has been accepted by or for the State [7]. After the contract is substantially complete, the State may, on request, reduce what it is withholding if it considers that desirable and prudent [7]. The chapter's 30-day release rule then reaches public owners as well [8], Department of Transportation contracts aside [3].
How to comply
The clocks run from two different events, and each binds a different payer.
- Final acceptance starts the first clock. Amounts retained during the work and due to the contractor on completion must be paid within 30 days after final acceptance of the work [8]. That applies to private and public owners within the chapter alike [8].
- Receipt of retainage starts the second. A contractor has 7 days after receiving retainage to pay each subcontractor or material supplier the full amount due [8]. Each subcontractor, in turn, has 7 days after its own receipt to pay its subcontractors and suppliers [8]. The duty applies notwithstanding any contrary agreement, so a contract term cannot lengthen it [8].
- Delay has a price. Unreasonably withholding acceptance of the work, or failing to pay retainage, brings in the chapter's dispute section [8]. Once arbitration or litigation has begun and non-compliance is found, the arbitrator or court must award 1% per month of the sums wrongfully withheld, as a penalty on top of all other damages [4]. Reasonable attorney's fees and expenses go to the substantially prevailing party [4].
- State jobs allow a swap. On a State public improvement contract, a contractor may substitute Treasury or Maine bonds and notes for the retained money [7]. Section 1746 itself specifies no interest [7].
Whether a county, municipal or school-district owner faces a percentage limit is outside this page: chapter 201-A gives those owners the timing rule, and the 5% in § 1746 is written for State public improvement contracts [7]. Read the contract, and the sections listed in the Sources below, for the terms that govern your job.
What changed recently
Section 1746 was last amended by PL 2025, c. 390, Part A, § 9, which changed its custodial-services paragraph [6]. Its earlier paragraphs date from PL 1971, c. 593, § 22 and PL 1967, c. 437 [6]. Section 1116 was enacted by PL 1993, c. 461, § 1 [8], and the penalty section, § 1118, has been unchanged since [4].
Related
- Retainage calculator for the pay-application math on your own contract.
- Retainage laws by state for comparison with other states.