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Retainage · North Carolina

North Carolina retainage law: 5% public cap, 60-day release (2026)

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

On North Carolina public projects (G.S. 143-134.1(b1)), no retainage is allowed under $100,000 in total project costs; from $100,000 up it is capped at 5% of each periodic payment, released within 60 days after a pay request plus substantial completion or beneficial occupancy. No statute caps private retainage, but a contractor may not hold more from a subcontractor than the owner's initial percentage (G.S. 22C-4).

Private work

North Carolina · Private workVerified 2026-09-22
Retainage cap
No North Carolina statute caps retainage on private construction. The only statutory limit is a pass-through rule: under G.S. 22C-4 a contractor may withhold from a subcontractor 'a reasonable amount for retainage not to exceed the initial percentage retained by the owner'. Chapter 22C does not apply to residential contractors as defined in G.S. 87-10(1a), or to residential improvements of 12 or fewer units (G.S. 22C-6).
Deadline
7 days
The contractor's receipt of each periodic or final payment from the owner. The seven-day deadline is for paying subcontractors; Chapter 22C sets no date for the owner's release of retainage.
Statute
N.C. Gen. Stat. ch. 22C (Payments to Subcontractors), §§ 22C-3, 22C-4, 22C-5, 22C-6.
What the statute says
Nothing in this Chapter shall prevent the contractor ... from withholding such application and certification to the owner for payment to the subcontractor for: ... or a reasonable amount for retainage not to exceed the initial percentage retained by the owner.
N.C. Gen. Stat. ch. 22C (Payments to Subcontractors), §§ 22C-3, 22C-4, 22C-5, 22C-6. · Archived copy of the official text, captured 2026-08-03

Public work

North Carolina · Public workVerified 2026-09-22
Retainage cap
5%
No retainage at all is allowed where total project costs are under $100,000. At or above $100,000 the owner may not retain more than 5% of any periodic payment. Applies to public construction contracts let by the State or any political subdivision, except contracts let by the Department of Transportation under G.S. 136-28.1.
Deadline
60 days
Submission of a pay request plus either the owner's receipt of a certificate of substantial completion from the architect/engineer/designer, or the owner's beneficial occupancy or use of the project.
Statute
N.C. Gen. Stat. § 143-134.1(b1).
What the statute says
The owner shall not retain more than five percent (5%) of any periodic payment due a prime contractor. When the project is fifty percent (50%) complete, the owner, with written consent of the surety, shall not retain any further retainage from periodic payments due the contractor if the contractor continues to perform satisfactorily ...
N.C. Gen. Stat. § 143-134.1(b1). · Archived copy of the official text, captured 2025-03-18

Who this applies to

North Carolina treats the two sides very differently. Public work has a detailed retainage statute; private work has only rules for what passes from contractor to subcontractor.

Public construction. G.S. 143-134.1(b1) governs public construction contracts let by the State or any political subdivision [1]. Contracts let by the Department of Transportation under G.S. 136-28.1 are outside it [1].

Private construction. No North Carolina statute caps retainage on private work, so the amount an owner holds is a matter for the contract [2]. Chapter 22C, on payments to subcontractors, supplies the one statutory limit [2]. It does not apply to residential contractors as defined in G.S. 87-10(1a), or to residential improvements of 12 or fewer units [2].

What the rule says

Public retainage depends first on project size. Where total project costs are under $100,000, no retainage is allowed at all [1]. At $100,000 or more, the owner may not retain more than 5% of any periodic payment due a prime contractor [1]. Halfway through the job the withholding stops: once the project is 50% complete, the owner, with the surety's written consent, may not retain anything further from periodic payments while the contractor keeps performing satisfactorily [1]. After that 50% point, the owner may withhold additional retainage so that it holds 2.5% in total through completion [1]. On private jobs the only statutory ceiling sits one level down: a contractor may withhold from a subcontractor a reasonable amount for retainage, not exceeding the initial percentage the owner retained [2].

How to comply

Public projects, owner to prime contractor:

  1. Check whether total project costs reach $100,000, since below that figure no retainage applies [1].
  2. Compare each pay application's retainage with the 5% per-payment ceiling [1].
  3. At 50% completion, check the pay applications that follow against the surety-consent rule and the 2.5% total described above [1].
  4. Release comes within 60 days after a pay request is submitted and either the owner receives a certificate of substantial completion from the architect, engineer or designer in charge, or the owner receives beneficial occupancy or use of the project, as the contract documents specify [1]. The owner releases it with the surety's written consent, and may keep back no more than 2.5 times the value of the remaining work [1].
  5. For early finishing trades, retainage drops to 0.5% once that trade's work is 100% complete, with payment within 60 days [1].

Final payment delayed more than 45 days after acceptance, certification of completion, or occupancy and use bears interest from the 46th day at 1% per month or fraction thereof, though a lower agreed rate may apply [1]. Retainage a prime contractor holds from a subcontractor above the owner's percentage also bears 1% per month [1]. On bonded projects, bids may be taken both with and without retainage [1].

Private projects, contractor to subcontractor: When a subcontractor has performed under its contract, the contractor must pay it the full amount received for that subcontractor's work and materials within seven days of receiving each periodic or final payment, and each subcontractor owes the same to its own subcontractors [2]. That seven-day deadline is for paying subcontractors; Chapter 22C sets no date for the owner's release of retainage to the contractor [2]. A payment held more than seven days past receipt bears interest at 1% per month or fraction thereof on the unpaid balance, starting on the eighth day [2].

What changed recently

The public section, G.S. 143-134.1, dates from 1959, c. 1328, and its history lists changes in 1967, 1979, 1983 and 2007-365, s. 1 [1]. Check the current text of the section for any later amendment before relying on the public figures above. Chapter 22C dates from 1987 (Regular Session, 1988), c. 946, and its § 22C-2 was amended in 1991, c. 620 [2].

Related

Run the numbers for North Carolina

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. N.C. Gen. Stat. § 143-134.1, North Carolina General Assembly official statute page (archived copy, captured 2025-03-18)
  2. N.C. Gen. Stat. Chapter 22C, Payments to Subcontractors, North Carolina General Assembly official chapter page (archived copy, captured 2026-08-03)

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.