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Retainage · Montana

Montana retainage law: 5% cap, release at final acceptance (2026)

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

Montana caps retainage at 5% on both sides. On private work, Mont. Code Ann. § 28-2-2110 sets the ceiling, passes it down to subcontractors and releases retainage as each separately priced portion is finally accepted; homes under $400,000 are exempt. On public work, § 18-2-316 caps contracts of the state, counties, cities and school districts at 5%, and § 18-2-306 sets final payment 30 days after final acceptance.

Private work

Montana · Private workVerified 2026-09-22
Retainage cap
5%
Flat 5% ceiling on any construction contract subject to Title 28, ch. 2, part 21. Part 21 covers both private and governmental owners; it does not apply to residential projects/improvements intended for residential purposes costing less than $400,000 (28-2-2107).
Deadline
Final acceptance of each portion of work for which a separate price is stated in the construction contract. The statute sets no day count for releasing retainage; the general payment clock in 28-2-2103 is 7 days after a payment request is approved (a request is deemed approved 21 days after receipt absent written disapproval).
Statute
Mont. Code Ann. § 28-2-2110.
What the statute says
The maximum retainage applied to construction contracts subject to the provisions of this part may not exceed 5%. The retainage percentage withheld by an owner, as provided in subsection (1), from a construction contractor is the maximum retainage that a construction contractor may withhold from a subcontractor.
Mont. Code Ann. § 28-2-2110. · Official text · retrieved 2026-09-22

Public work

Montana · Public workVerified 2026-09-22
Retainage cap
5%
Mont. Code Ann. § 18-2-316(1): the maximum retainage on construction contracts administered by the state of Montana or any department, agency or political subdivision of the state, by any county, municipality or political subdivision of either, or by a school district may not exceed 5% if the contractor is performing by the terms of the contract; the percentage a government entity withholds from the contractor is the most the contractor may withhold from a subcontractor (§ 18-2-316(2)). Local government owners are also covered by Title 28, ch. 2, part 21, whose 5% ceiling (§ 28-2-2110) applies to a 'government entity', defined as a city, town, county, consolidated municipal-county government, school district or other special district (§ 28-2-2101(3)); the state and its agencies are not in that definition. Part 21 does not apply to residential projects costing less than $400,000 (§ 28-2-2107).
Deadline
30 days
On a contract for the construction of a building, the government entity decides on final acceptance within 10 days after the contractor requests it, and makes final payment of the contract price within 30 days after final acceptance, unless the law or the contract provides otherwise (§ 18-2-306(1)); late payment carries interest (§ 18-2-306(2)). Under part 21, retainage on local work is released on final acceptance of each separately priced portion of the work (§ 28-2-2110).
Statute
Mont. Code Ann. § 18-2-316 (5% public cap); § 18-2-306 (final payment on building contracts); § 28-2-2110 (local government owners, part 21).
What the statute says
The maximum retainage applied to construction contracts administered by the state of Montana or any department, agency, or political subdivision of the state of Montana, by any county, municipality, or political subdivision of a county or municipality, or by a school district may not exceed 5% if the contractor is performing by the terms of the contract.
Mont. Code Ann. § 18-2-316 (5% public cap); § 18-2-306 (final payment on building contracts); § 28-2-2110 (local government owners, part 21). · Official text · retrieved 2026-10-17

Who this applies to

Montana has two retainage statutes. Part 21 of Title 28, chapter 2, covers private owners and local government owners [2]: its "government entity" is a city, town, county, consolidated municipal-county government, school district or other special district, which leaves out the state and its agencies. Its retainage section is § 28-2-2110 [1]. Public contracts, the state's included, also fall under § 18-2-316 in Title 18 [7].

What the rule says

Montana uses one flat number with no step-down. The maximum retainage on a construction contract subject to part 21 may not exceed 5% [1]. Whatever percentage the owner actually withholds from the construction contractor then becomes the most that contractor may withhold from a subcontractor [1]. Release is tied to acceptance rather than to a date: retainage must be released upon the final acceptance of each portion of work for which the construction contract states a separate price [1].

How to comply

Three things in the contract decide how this plays out on a job.

The rate. A retainage clause above 5% goes past the part 21 ceiling [1]. On the subcontract side, compare the sub's retainage rate with the percentage the owner is holding from the prime, because the owner's figure is the limit [1].

The price breakdown. Because release follows final acceptance of each separately priced portion [1], the way the contract states its prices determines how many release points the job has. List the portions that carry a stated price of their own and note when each is finally accepted.

The payment clock. On a public contract for the construction of a building, the government entity decides on final acceptance within 10 days after the contractor asks for it and makes final payment within 30 days after final acceptance, unless the law or the contract says otherwise [8]. Section 28-2-2110 sets no day count for releasing retainage [1]. The general payment section of part 21, § 28-2-2103, puts payment 7 days after a payment request is approved [3], and it treats a request as approved 21 days after receipt unless it is disapproved in writing [3]. When a payment is delayed more than 30 days, § 28-2-2104 adds interest of 1 1/2% a month, or a pro rata fraction of it, on the unpaid balance, running from the day after the payment was due [4].

On a public job, also compare the retainage with § 18-2-316's 5%, which binds the subcontract to the same percentage the government entity withholds [7]. On any job, the sections in the Sources below are the text to check before relying on this summary.

What changed recently

Section 28-2-2110 was enacted by Sec. 1, Ch. 364, L. 2001, and amended by Sec. 2, Ch. 244, L. 2005 [1]. The public contracts cap, § 18-2-316, was enacted by Sec. 2, Ch. 222, L. 1999 [7]. The legislature next meets in 2027.

Related

Run the numbers for Montana

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. Montana Code Annotated 28-2-2110, Limit on retainage (retrieved 2026-09-22)
  2. MCA 28-2-2101, Definitions (retrieved 2026-09-22)
  3. MCA 28-2-2103, Payment to contractor and subcontractor (retrieved 2026-09-22)
  4. MCA 28-2-2104, Obligations upon delay of payment (retrieved 2026-09-22)
  5. MCA 28-2-2107, Exception for certain residential dwellings (retrieved 2026-09-22)
  6. MCA Title 28, ch. 2, part 21 section index (retrieved 2026-09-22)
  7. Mont. Code Ann. § 18-2-316, limit on retainage for public contracts (MCA 2025) (retrieved 2026-10-17)
  8. Mont. Code Ann. § 18-2-306, final acceptance and final payment on construction contracts (MCA 2025) (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.