Who this applies to
Ohio treats public and private work differently, and the difference decides who owes what to whom.
- Public improvements. Chapter 153 of the Revised Code limits what a public authority may hold back from its contractor, and it protects subcontractors too: no subcontract may be paid at a lower rate than the public authority pays the contractor [6].
- Private construction. Section 4113.61 sets no cap: it leaves the percentage to any retainage provision in the contract, invoice or purchase order, and deals only with how fast payments and retainage move down the chain [5]. The section does not apply to the construction or improvement of single-, two- or three-family detached dwelling houses [5].
What the rule says
On a public improvement, partial payments for labor under a unit or lump sum price contract must be at least 96% of the estimates the contractor prepares and the architect or engineer approves, which leaves no more than 4% retained on labor, with no step at 50% completion [6]. When the major portion of the project is substantially completed and occupied, in use or otherwise accepted, and no other reason exists to withhold retainage, the retained percentages for that portion, with the interest accrued on them, go to the primary contractor within 30 days [7]. On private work, § 4113.61 sets no ceiling and no owner deadline; its retainage deadline, 10 calendar days, governs the contractor's payment of final retainage to subcontractors and material suppliers [5].
How to comply
Public improvement contracts
- Check each partial payment for labor against the 96% floor [6]. Stored materials are paid at 92% of invoice cost, with the balance paid once the material is incorporated into the work [3].
- Pay each subcontract at no lower rate than the public authority pays you [6].
- Count 30 days from substantial completion, occupation, use or acceptance of the major portion of the project [7]. From then on, only the amount reasonably necessary to assure final completion may be held, and that balance is due within 30 days after final completion [7].
- Know the interest rules. Payment on approved estimates is due within 30 days; if it is late, or retainage is withheld without authority, the contractor is allowed interest at the average prime rate established at commercial banks in the nearest city of over 100,000 population [3]. If money due is neither paid nor deposited in escrow, the governmental entity owes 8% annual interest, compounded daily [4].
Private contracts
- Under § 4113.61, the retainage percentage is whatever the contract, invoice or purchase order provides, and the contractor may also withhold amounts that may be necessary to resolve disputed liens or claims [5].
- After receiving final retainage from the owner for improvements to property, the contractor pays each subcontractor and material supplier its proportion within 10 calendar days, or within the period in the contract, invoice or purchase order if that is shorter [5].
- A late pass-down costs the payer interest of 18% per annum, on top of the retainage owed, from the eleventh day after receipt until full payment [5].
Section 4113.61 does not set a date for the owner's release to the contractor [5]; for that date, look to the contract.
What changed recently
House Bill 96 of the 136th General Assembly brought public-improvement retainage on labor down to a maximum of 4%, effective September 30, 2025 [6]. The current texts of the release section, § 153.13 [7], the stored-materials and interest section, § 153.14 [3], and the escrow section, § 153.63 [4], took effect the same day under the same bill. The private pass-down rule in § 4113.61 has been in effect since September 29, 2011, under House Bill 153 of the 129th General Assembly [5].
Related
- Retainage calculator: takes separate retainage rates for completed work and stored materials.
- Retainage laws by state: Ohio alongside the other states.