Who this applies to
Vermont's retainage section, 9 V.S.A. § 4005 [1], sits in chapter 102 of Title 9 [7] and governs private and public construction contracts in the same words. Public work is covered through a definition: under § 4001, "Owner" includes the State of Vermont and its instrumentalities and subdivisions, among them municipalities and school districts [2]. A State contract, a municipal or school-district project and a private job all run on one timing rule.
The rule also reaches past the owner. Where the owner holds no retainage but a contractor holds some back from its subcontractor, the same clock, 30 days [1] from final acceptance, applies to that subcontract. When a contractor receives retainage, its subcontractor's share is due within 7 days [1].
Section 4009 carves out one situation: the chapter does not apply to materials bought by a natural person working on their own property [6].
What the rule says
There is no ceiling on how much may be held back; Vermont controls when it has to come back. Amounts retained during performance that are due for release on final completion must be paid within 30 days [1] after final acceptance of the work.
Section 4005(e) takes one category of money off the table. A contractor or subcontractor may not hold retainage on delivered materials that carry a manufacturer's warranty or are graded to industry standards, unless that same party is both the materialman and the installer [1].
How to comply
- Percentage. Whatever the contract sets; Vermont offers no statutory ceiling to compare it with.
- Clock. Count 30 days [1] from final acceptance of the work for retainage owed on the contract, and 7 days [1] from the contractor's receipt for a subcontractor's share.
- Materials. Look at pay applications for retainage taken on delivered materials that are under a manufacturer's warranty or graded to industry standards; the statute bars it except where one party both supplies and installs.
- Penalties. Under § 4005, unreasonably withholding acceptance or failing to pay retainage brings in the interest, penalty and fee provisions of sections 4002, 4003 and 4007 [1]. Section 4007 sets the penalty at 1% per month [4] of the sums wrongfully withheld and awards reasonable attorney's fees and expenses to the substantially prevailing party.
The statute text and your contract remain the authority for a specific dispute.
What changed recently
Section 4005 was added by 1991, No. 74, § 1, and took effect on January 1, 1992 [1]. It was amended in 2017 by No. 179 of the adjourned session, § 3 [1].
Related
- Retainage calculator: put a figure on the retainage your contract allows.
- Retainage laws by state: Vermont's timing-only approach set beside states that cap the percentage.