Who this applies to
North Dakota puts the same retainage ceiling in two chapters of its Century Code: one for work between private parties, one for public improvements.
- Private contracts. Section 43-07-23 reaches contracts between persons for work to be done by a contractor [2]. It stands aside for contracts subject to § 40-22-37 or § 48-01.2-13 (public improvements), and for contracts governed by federal statutes or regulations that require different retention terms [2].
- Public improvements. Section 48-01.2-13 controls what each partial payment estimate holds back, and the governing body is the party that retains the money and later pays it out [1].
What the rule says
Retention in North Dakota stops at the halfway point instead of running to the end of the job. Each estimate may carry retainage of 10% up to the point the project reaches 50% completion [2], and estimates after that carry none for the rest of the contract [2]. Public improvements use the same 10% and 50% figures [1], with one opening: retention can go on past the halfway point where unsatisfactory progress or performance is documented [1]. Neither section sets a day count for paying out what has already been held [2] [1].
How to comply
- Hold the retention clause to the statute. On a private job, a clause that keeps more than 10% of an estimate, or keeps taking retainage once the project is 50% complete, goes past the maximum in § 43-07-23 [2]. On a public improvement, retention after the 50% mark needs documented unsatisfactory progress or performance [1].
- Find the payout date in the contract on private work. Section 43-07-23 names no deadline for releasing retained amounts [2]. One money rule does apply at the end: if the owner, governing board or authorized committee invested the retained funds, the interest they earned is payable to the contractor at final payment [2].
- Follow the public close-out sequence. Once 95% of the contract is complete, the governing body may pay the contractor up to 95% of the amount retained from earlier estimates [1]. The rest is paid in the amounts and at the times the architect or engineer approves [1], and final payment of all money due follows completion of all work, the governing body's acceptance of the project and provision of the necessary releases [1].
- Track the 30-day interest trigger on public work. Under § 48-01.2-14, a governing body that goes more than 30 days, counted from approval or from the completion and acceptance date, without considering a properly submitted estimate, paying an approved estimate or making final payment owes interest from the date of approval [1]. The rate is two percentage points below the Bank of North Dakota prime rate [1].
The full text of both sections is linked in the Sources list below; read it next to your own contract before you bill or release retainage.
Related
- Retainage calculator: enter the contract sum and the work completed to see what an estimate pays and what it keeps back.
- Retainage laws by state: the index of state retainage pages.