Who this applies to
South Carolina deals with retainage in two separate parts of its code, and the kind of owner decides which one matters.
State public construction. Title 11, chapter 35 [1] is the Consolidated Procurement Code, the law that governs state governmental bodies. Its retainage limit is written for a construction contract and a construction subcontract alike, so the 3.5% [1] ceiling binds the State when it holds money back from a prime contractor and binds that prime when it holds money back from a subcontractor. Local political subdivisions are, for the most part, outside chapter 35 [1].
Private commercial projects. Article 1 of Title 29, chapter 6 [2], the chapter on payments to contractors, subcontractors and suppliers, covers commercial private work. Section 29-6-60 takes three categories out of the chapter altogether: residential homebuilders, residential improvements of 16 or fewer units, and owner-financed private improvements [2].
What the rule says
On state work, the ceiling is measured one installment at a time rather than against the contract total. Where a contract or subcontract pays in installments based on an estimated percentage of completion and keeps part of each payment until the job is done, the amount kept from any single installment may be no more than 3.5% [1]. Release follows the job's divisions. On a project shared among several separate contractors or subcontractors, each one's scope counts as a division; once a division is certified as complete, the retainage allocable to it goes to the prime contractor forthwith. From the day it receives that money, the prime has 10 days [1] to hand the full retention it withheld to the subcontractor responsible for the completed work.
Private commercial work gets permission instead of a limit. The chapter confirms that an owner, a contractor or a subcontractor may hold back a payment for listed reasons, among them unsatisfactory job progress, defective construction not remedied and disputed work, and "a reasonable amount for retainage" is one entry on that list [2]. No percentage and no release date come with it.
How to comply
On a state public contract:
- Compare the retainage clause with the 3.5% [1] ceiling, installment by installment. A subcontract under that prime carries the same ceiling.
- Treat each certified division as its own release event. The retainage for that division is due to the prime forthwith, without waiting for the rest of the project.
- If you are the subcontractor, the 10-day [1] window opens when the prime receives the division's retainage, and what is owed is the full retention the prime held from you.
On a private commercial job, the contract supplies the percentage, which the chapter's wording frames as a reasonable amount, and the release timing, for which the chapter sets no deadline. The chapter does put a price on late payment, though the rule is not specific to retainage: interest of 1% per month [2] from the due date, provided the payer was notified of the interest provision when payment was requested. Parties to a private project can contract out of the chapter's payment periods in § 29-6-30 and its interest rate in § 29-6-50 only by waiving those sections by number, in conspicuous bold or underlined type [2].
What changed recently
The 3.5% ceiling is in § 11-35-3030, and that section's history opens with 1981 Act No. 148 [1]. It was later amended by 2014 Act No. 264, effective June 6, 2014 [1], and by Section 43 of 2019 Act No. 41 (S.530), effective May 13, 2019, for solicitations issued after that date [1]. Chapter 6 of Title 29 was enacted by 1990 Act No. 426, and 2000 Act No. 295 added its Article 3 [2].
Related
- Retainage calculator: apply a retainage percentage to a progress payment and see the amount held back.
- Retainage laws by state: South Carolina's per-installment ceiling next to other states' caps and release rules.