Who this applies to
Missouri's retainage rules are confined to public works. Section 8.960 is limited by its terms to public works contracts awarded by the state, a political subdivision or a district [1], and it reaches both the prime contract and the subcontracts beneath it [1]. This page does not cover highway, road and bridge projects administered by the state highways and transportation commission; for those, read § 8.960 [1] together with the contract.
Private jobs are a different story. No statewide statute sets a retainage cap, a release deadline or any other retainage rule for private construction, so the contract between the parties governs the amount held and when it comes back [2]. The private payment statute, § 431.180, requires only that everyone who entered into a contract for private design or construction work after August 28, 1995 make all scheduled payments under its terms [2]. That statute does not apply to contracts for building, improving, repairing or remodeling owner-occupied residential property of four units or less [2].
What the rule says
On a public works project, retainage on a construction contract or subcontract may not exceed 5% of the value of that contract or subcontract [1]. A higher limit applies where the contractor is not required to obtain a bond under § 107.170 because the contract is not estimated to exceed $50,000: there the public owner may withhold up to 10% [1]. The owner may also reduce or eliminate retainage on any payment while the work is proceeding satisfactorily [1]. When a subcontractor's work is complete, the contractor may request an adjustment so that subcontractor can be paid in full before substantial completion [1].
How to comply
On public work, the release runs in this order.
- Substantial completion and acceptance. Payment follows substantial completion of the contract work and acceptance by the public owner's authorized contract representative [1].
- A written answer within 14 calendar days. If the owner decides the work is not substantially complete and accepted, it must explain why in writing within 14 calendar days [1]. If it does not, it must pay at least 98% of the retainage within 30 calendar days [1].
- Payment within 30 days. The owner pays the contractor at least 98% of the retainage, less offsets or deductions authorized in the contract or by law, within 30 days after acceptance, once the invoice and required documentation are in complete and acceptable form [1].
- Punch-list items. Where minor items remain, the owner may withhold 150% of the value of each item until it is completed [1].
- Passing payment down. A contractor that, without reasonable cause, fails to pay its subcontractors and suppliers within 15 days of being paid owes them 1.5% per month, and that rule applies at every tier [1].
If the contracting agency misses the 30-day progress-payment window, it owes 1.5% per month from the end of that period until paid [1]. Money withheld in good faith for reasonable cause earns no interest [1]. If a court finds a withholding was not in good faith, it may impose 1.5% per month from the invoice date and award attorney fees [1].
On private work, check the retainage clause of the contract itself. If a party is not paid as the contract provides, it may sue under § 431.180, and the court may award interest of up to 1.5% per month from the date payment was due plus reasonable attorney fees to the prevailing party [2]. An arbitrator under § 435.350 may award the same remedies [2]. That is a general non-payment remedy rather than a retainage rule.
What changed recently
Missouri's public retainage section was transferred in 2022 from § 34.057 to § 8.960 [3], and its history lists L. 2022 S.B. 758, effective 28 August 2022 [1]. The private payment statute, § 431.180, comes from S.B. 93 of 1995 and was amended by H.B. 343 of 1999, effective 28 August 1999 [2].
Related
- Retainage calculator: pay-application retainage and payment due, with a public-project setting.
- Retainage laws by state: the rules for public and private work elsewhere.