Who this applies to
Oklahoma's retainage statutes in Title 61 are written for government owners only [1]. Section 113.1 of Title 61 governs "a public construction contract," and the Fair Pay for Construction Act defines "Owner" as a state government entity, municipality, township or public trust, or an instrumentality of one of them [1]. Neither statute reaches private construction, so on a private job the percentage and the release date are whatever the contract provides.
On public jobs, two statutes overlap [1]:
- 61 O.S. § 113.1 requires a public construction contract to provide for up to 5% of all partial payments to be withheld as retainage [1]. The Department of Transportation and the Oklahoma Turnpike Authority may not withhold retainage at all [1].
- The Fair Pay for Construction Act, 61 O.S. § 226, limits retainage to 5% of the payment due and applies the same limits to subcontracts [1]. The Act does not apply to highway, railroad or turnpike construction; to roads, bridges, utilities, traffic control, drainage, sanitary sewer or waterline construction except as part of a construction contract; or to one- to four-family dwellings [1].
What the rule says
Both public statutes start from a 5% ceiling on partial payments [2]. Once the contractor has completed more than 50% of the total contract amount, and the owner or agency finds that satisfactory progress is being made, retainage is reduced to 2.5% of the amount earned to date [2]. On a subcontract, retainage may not exceed 5% of the payment due and drops to 2.5% of the original contract amount once the subcontractor's work is at least 50% complete [2]. Release is keyed to a certificate of substantial completion for the project or a separate usable phase. Within 21 calendar days after it issues, provided the prime contractor has performed adequately and any applicable surety approves, the owner releases retainage to the prime contractor, keeping back no more than 150% of the estimated costs to correct any incomplete or defective work [1].
How to comply
- Test the clause against both limits. A retainage clause above 5% goes beyond what either statute allows where it applies [1]. Past 50% of the contract amount, with satisfactory progress, retainage comes down to 2.5% of the amount earned to date [2].
- Start the 21-day count at the certificate. The period runs from the issuance of the certificate of substantial completion for the project or a separate usable phase [1].
- Securities in place of cash. Under section 113.2 [1], a contractor may withdraw retainage by depositing U.S. Treasury securities, Oklahoma general obligation bonds or certificates of deposit from an Oklahoma bank.
- Interest on a late final payment. Section 113.3 sets interest of 1 1/2% per month of the final payment due for awarding public agencies other than school districts, and 3/4% per month for school districts [1]. On lump sum contracts, interest begins thirty days after the work has been completed and accepted and the required certifications furnished, and continues until final payment is tendered [1].
The statute text is linked under Sources. On a private job, the contract is the document that answers each of these questions.
What changed recently
Section 113.1 was added by Laws 1977, c. 74, § 2. Two 2022 acts amended it, Laws 2022, c. 238, § 24 and Laws 2022, c. 315, § 1, both effective November 1, 2022, and the official compilation prints both versions; each reduces retainage to 2.5% after 50% completion [2]. Section 226 of the Fair Pay for Construction Act was added by Laws 2004, c. 256, § 6, and last amended by Laws 2022, c. 315, § 2, effective November 1, 2022, which replaced the earlier rule tied to bonded work [2].
Related
- Retainage calculator: handles a lower rate after a completion threshold, as on Oklahoma public work past 50%.
- Retainage laws by state: the rest of the state pages.