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Retainage · Oregon

Oregon retainage law: 5% cap, 30-day release (2026)

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

Oregon lets an owner, contractor or subcontractor withhold no more than 5% of the contract price of completed work (ORS 701.420), and a contracting agency no more than 5% of each progress payment on a public improvement (ORS 279C.570). Interest on the final payment runs from 30 days after the work is completed and accepted: 1% a month on private jobs and 1.5% a month on public jobs.

Private work

Oregon · Private workVerified 2026-09-22
Retainage cap
5%
An owner, contractor or subcontractor may withhold as retainage not more than five percent of the contract price of the work completed, on contracts for construction and home improvement.
Deadline
30 days
Completion of the work by the contractor and acceptance by the owner. The contractor notifies the party it is responsible to when it considers the work complete; that party has 15 days to accept the work or identify work still to be performed.
Statute
Or. Rev. Stat. § 701.420(1).
What the statute says
Partial payment is allowed and may be made on contracts for construction and home improvement. An owner, contractor or subcontractor may withhold as retainage an amount equal to not more than five percent of the contract price of the work completed.
Or. Rev. Stat. § 701.420(1). · Archived copy of the official text, captured 2026-04-21

Public work

Oregon · Public workVerified 2026-09-22
Retainage cap
5%
A contracting agency may reserve as retainage from any progress payment on a public improvement contract an amount not to exceed five percent of the payment. Retainage a contractor or subcontractor withholds on public improvement contracts is governed by ORS 701.420 (also 5%).
Deadline
30 days
Final payment of the contract price. Retainage must be included in and paid as part of the final payment; interest runs from 30 days after the work is completed and accepted, with the same 15-day accept-or-notify mechanism.
Statute
Or. Rev. Stat. § 279C.570(7)-(8).
What the statute says
A contracting agency may reserve as retainage from any progress payment on a public improvement contract an amount not to exceed five percent of the payment. As work progresses, a contracting agency may reduce the amount of the retainage and the contracting agency may eliminate retainage on any remaining monthly contract payments after 50 percent of the work under the contract is completed if, in the contracting agency's opinion, such work is progressing satisfactorily.
Or. Rev. Stat. § 279C.570(7)-(8). · Archived copy of the official text, captured 2026-02-23

Who this applies to

Oregon's limit follows retainage down every level of a job.

What the rule says

Private and public work share one ceiling, 5% [1] [2], but only the public statute provides a step-down as the work proceeds. After 50% of the work is completed, a contracting agency may eliminate retainage on the remaining monthly payments if, in its opinion, the work is progressing satisfactorily, on written application and with the surety's approval [2]; at 97.5% completion it may cut the amount retained to 100% of what the remaining work is worth [2]. Private retainage has no such step [1]. On public work the retainage is paid as part of the final payment [2], and on both sides interest on that final payment starts running 30 days after completion and acceptance of the work [1] [2].

How to comply

  1. Notice of completion. When the contractor considers the work complete, it notifies the party it is responsible to, and that party has 15 days to accept the work or identify the work still to be performed [1].
  2. Interest on a private final payment. The owner, contractor or subcontractor pays 1% per month on the final payment due, beginning 30 days after completion and acceptance, or 30 days after the 15-day period ends if the party does not respond, and running until final payment is tendered [1].
  3. Interest on a public final payment. The contracting agency pays 1.5% per month on the final payment, retainage included, from 30 days after completion and acceptance, with the same 15-day accept-or-notify step [2]. Progress payments other than retainage carry interest at three times the 90-day commercial paper discount rate, capped at 30 percent, starting 30 days after the invoice is received or 15 days after it is approved, whichever is earlier; the agency pays it automatically, without the contractor having to ask [2].
  4. Matching release when a subcontractor is paid. Within 15 days after notice that a subcontractor has been paid in full, the owner releases the matching retainage to the contractor [1].
  5. A bond instead of retainage. ORS 701.435 provides for a surety bond in lieu of retainage on large commercial structures and on public improvement contracts [1].

Both chapters are linked under Sources; read them together with the completion and notice terms of your contract.

What changed recently

The same two session laws amended both sections: 2019 c.486 and 2024 c.2 [1] [2]. ORS 701.420 goes back to 1975 c.772, with further amendments in 2010 (c.77) and 2013 (c.410) [1]. ORS 279C.570 dates from 2003 c.794 and was also amended in 2005 (c.103) [2].

Related

Run the numbers for Oregon

Retainage laws: other states

Sources

  1. ORS Chapter 701, Construction Contractors and Contracts, 2025 Edition (Oregon Legislative Assembly official ORS page) (archived copy, captured 2026-04-21)
  2. ORS Chapter 279C, Public Contracting, Public Improvements and Related Contracts, 2025 Edition (Oregon Legislative Assembly official ORS page) (archived copy, captured 2026-02-23)

Changelog

  1. : Page published.
  2. : Dataset first published with 36 of 51 jurisdictions verified.