Bid calculator
Menu
Retainage · Michigan

Michigan retainage law: 10% public cap until 50% in place (2026)

By Sami Chicha, EditorUpdated Checked against primary sources · not yet reviewed by a licensed professionalFact-checked
Quick answer

Under MCL 125.1563 (1980 PA 524), a Michigan public agency may retain no more than 10% of the dollar value of work in place until the work is 50% in place; after that, it may withhold no more unless it finds the contractor is not making satisfactory progress. Except as section 4(7) and (8) of the Act provides, retainage and its interest are released with the final progress payment. This page covers public work only.

Private work

Michigan · Private workVerified 2026-09-22
Retainage cap
Not in our verified record
Deadline
Not in our verified record
Statute
Not in our verified record

Public work

Michigan · Public workVerified 2026-09-22
Retainage cap
10%
MCL 125.1563(2) limits retainage to not more than 10% of the dollar value of all work in place until the work is 50% in place; after 50% in place no additional retainage may be withheld unless the public agency determines that the contractor is not making satisfactory progress.
Deadline
Except as provided in section 4(7) and (8) of the Act, retainage and the interest earned on it are released to the contractor together with the final progress payment.
Statute
MCL 125.1563 (1980 PA 524).
What the statute says
(2) The retainage shall be limited to the following: (a) Not more than 10% of the dollar value of all work in place until work is 50% in place. (b) After the work is 50% in place, additional retainage shall not be withheld unless the public agency determines that the contractor is not making satisfactory progress
MCL 125.1563 (1980 PA 524). · Archived copy of the official text, captured 2025-02-22

Who this applies to

Everything on this page concerns public work: contracts under Michigan's 1980 PA 524, whose retainage limits appear in MCL 125.1563 [1]. The rules there are written in terms of what a public agency may withhold from its contractor [1].

Private construction is not covered here. For a private Michigan job, the contract is where the retainage percentage and release terms are set out, and a Michigan construction lawyer can say what else might apply to it.

What the rule says

Michigan measures public retainage against progress on site, not against the contract price. While less than half the work is in place, the agency may hold no more than 10% of the dollar value of all work in place [1]. When the work reaches 50% in place, the withholding stops growing: from then on no additional retainage may be withheld [1], unless the public agency determines that the contractor is not making satisfactory progress [1]. What has been held comes back at the end of the job, when the retainage and the interest earned on it are released to the contractor together with the final progress payment [1].

How to comply

Set your contract's retainage terms against the statute point by point.

  1. The base. The limit is a share of the dollar value of all work in place [1], so compare the contract's retainage clause with that measure as well as with the 10% figure [1].
  2. The halfway line. Track the point at which the work is 50% in place [1]. Withholding beyond it depends on a determination by the agency that progress is unsatisfactory, so a pay application after that point can be checked for new retainage [1].
  3. Final payment. Except as section 4(7) and (8) of the Act provides, the retainage and the interest earned on it are released together with the final progress payment [1], so check that both appear on it.
  4. Disagreements. MCL 125.1564 is the section that deals with resolving disputes over retained funds [2].

Read the contract and the sections listed in the Sources below together before relying on this summary.

Related

Run the numbers for Michigan

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. MCL 125.1563 (1980 PA 524), official Act 524 of 1980 PDF, Michigan Legislature (archived copy, captured 2025-02-22)
  2. MCL 125.1564 (retainage dispute resolution), Michigan Legislature (archived copy, captured 2025-01-18)

Changelog

  1. : 1 more jurisdiction verified and published, 47 of 51 in all.
  2. : 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.
  3. : 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.
  4. : 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.
  5. : 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.
  6. : 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.
  7. : 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.
  8. : 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).
  9. : 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.
  10. : 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.
  11. : 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.
  12. : 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.
  13. : 10 more jurisdictions verified and published, 46 of 51 in all.
  14. : Page published.
  15. : Dataset first published with 36 of 51 jurisdictions verified.