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Retainage · Vermont

Vermont retainage law: 30-day release, no percentage cap (2026)

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

Vermont puts no percentage cap on retainage. Retainage due on final completion must be paid within 30 days after final acceptance of the work (9 V.S.A. § 4005), and a contractor pays a subcontractor's share within 7 days of receiving it. Public jobs follow the same rule because 'Owner' includes the State, municipalities and school districts. Wrongful withholding draws a 1% monthly penalty plus attorney's fees.

Private work

Vermont · Private workVerified 2026-09-22
Retainage cap
Vermont sets no percentage cap. It regulates timing instead: retainage must be paid within 30 days after final acceptance. A contractor or subcontractor may not hold retainage on delivered materials that are covered by a manufacturer's warranty or graded to industry standards (Sec. 4005(e)), except where the party is both materialman and installer.
Deadline
30 days
Final acceptance of the work (and, where the owner holds no retainage but a contractor does hold it from its subcontractor, the same 30-day clock from final acceptance applies).
Statute
9 V.S.A. Sec. 4005.
What the statute says
If payments under a construction contract are subject to retainage, any amounts that have been retained during the performance of the contract and that are due to be released to the contractor upon final completion shall be paid within 30 days after final acceptance of the work.
9 V.S.A. Sec. 4005. · Official text · retrieved 2026-09-22

Public work

Vermont · Public workVerified 2026-09-22
Retainage cap
Vermont sets no percentage cap. It regulates timing instead: retainage must be paid within 30 days after final acceptance. A contractor or subcontractor may not hold retainage on delivered materials that are covered by a manufacturer's warranty or graded to industry standards (Sec. 4005(e)), except where the party is both materialman and installer. The chapter reaches public work because 'Owner' is defined to include the State of Vermont and its instrumentalities and subdivisions, including municipalities and school districts.
Deadline
30 days
Final acceptance of the work (and, where the owner holds no retainage but a contractor does hold it from its subcontractor, the same 30-day clock from final acceptance applies).
Statute
9 V.S.A. Sec. 4005.
What the statute says
If payments under a construction contract are subject to retainage, any amounts that have been retained during the performance of the contract and that are due to be released to the contractor upon final completion shall be paid within 30 days after final acceptance of the work.
9 V.S.A. Sec. 4005. · Official text · retrieved 2026-09-22

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

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

Run the numbers for Vermont

How retainage is held on each payment and when it comes back: Retainage in construction. Bill it on the pay application template, which carries retainage on work and on stored materials.

Retainage laws: other states

Sources

  1. 9 V.S.A. Sec. 4005, Retainage (retrieved 2026-09-22)
  2. 9 V.S.A. Sec. 4001, Definitions (retrieved 2026-09-22)
  3. 9 V.S.A. Sec. 4003, Contractor's and subcontractor's payment obligations (retrieved 2026-09-22)
  4. 9 V.S.A. Sec. 4007, Disputes; penalties; attorney's fees (retrieved 2026-09-22)
  5. 9 V.S.A. Sec. 4005a, Fund held in trust (retrieved 2026-09-22)
  6. 9 V.S.A. Sec. 4009, Owner exclusion (retrieved 2026-09-22)
  7. 9 V.S.A. ch. 102 section list (retrieved 2026-09-22)

Changelog

  1. : 1 more jurisdiction verified and published, 47 of 51 in all.
  2. : California private work corrected: Civ. Code § 8811 (SB 61) caps retention at 5% for contracts entered into on or after January 1, 2026; the row had said no cap.
  3. : Missouri private work corrected: Mo. Rev. Stat. §§ 436.300 to 436.336 cap private retainage at 10% and require release within 30 days of substantial completion; the row had said no private retainage rule.
  4. : Tennessee corrected: Tenn. Code Ann. § 66-34-203 caps owner-to-prime retainage at 5% of the contract, on public and private work; escrow applies to prime contracts of $500,000 or more, and the $300-a-day damages do not apply to public owners.
  5. : Idaho private work added: Idaho Code § 29-115 caps private retention at 5% and requires release within 35 days of final completion; the row had left private work out.
  6. : Rhode Island corrected: the 5% cap in R.I. Gen. Laws § 37-12-10.1 also covers private lienable work of $250,000 or more, and a retainage application may be submitted only 60 days after substantial completion unless the contract allows earlier.
  7. : Oklahoma public work corrected: since November 1, 2022, 61 O.S. §§ 113.1 and 226 reduce retainage to 2.5% of the amount earned to date after 50% completion with satisfactory progress, with no bond condition.
  8. : Montana public work corrected: state and local public contracts are capped at 5% under Mont. Code Ann. § 18-2-316, and final payment on building contracts is due within 30 days of final acceptance (§ 18-2-306).
  9. : Delaware public work corrected: 29 Del. C. § 6516(f)(3) requires retainage to be paid within 60 days after completion or notice of completion, with interest available from the 61st day; the row had no release deadline.
  10. : District of Columbia corrected: D.C. Code § 2-203.01 requires a 10% retent on District construction contracts until completion and acceptance, and the Private Contractor and Subcontractor Prompt Payment Act counts retainage as an undisputed amount due on its schedule; both rows had said no statute.
  11. : Colorado private work updated: HB26-1311 lets a contractor or subcontractor tender a retainage bond of up to 5% in lieu of retainage on contracts from August 12, 2026, and the owner must accept a compliant bond.
  12. : Kentucky private work updated: 2025 Ky. Acts ch. 156 raised the KRS 371.160 escrow threshold to $2,000,000 and barred waiving it by contract.
  13. : 10 more jurisdictions verified and published, 46 of 51 in all.
  14. : Page published.
  15. : Dataset first published with 36 of 51 jurisdictions verified.