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Retainage · Virginia

Virginia retainage law: 5% cap on public construction (2026)

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

In a Virginia public construction contract with progress payments based on estimated percentage of completion, the contractor must be paid at least 95% of the earned sum, so no more than 5% is retained (Va. Code § 2.2-4333); subcontracts on public projects follow the same rule, and withheld sums may go into the final payment. No statewide statute governs private retainage; § 11-4.6 leaves it to the contract.

Private work

Virginia · Private workVerified 2026-09-22
Retainage cap
No statewide statute
Virginia's private construction payment statute (Sec. 11-4.6, the 2022 'SB 550' payment-terms law) expressly leaves retainage alone: its 60-day payment requirement neither applies to nor prohibits retainage provisions. No statewide cap or release deadline for retainage on private work was located.
Deadline
No statewide statute
Statute
Va. Code Sec. 11-4.6.
What the statute says
Nothing in this subdivision shall be construed to apply to or prohibit the inclusion of any retainage provisions in a construction contract.
Va. Code Sec. 11-4.6. · Official text · retrieved 2026-09-22

Public work

Virginia · Public workVerified 2026-09-22
Retainage cap
5%
Public contracts for construction with progress payments based on estimated percentage of completion: the contractor must be paid at least 95% of the earned sum, so no more than 5% may be retained. The same rule flows down to subcontracts on public projects.
Deadline
The statute sets no separate release date; it states that all amounts withheld may be included in the final payment. For local-government contracts of $200,000 or more for the listed infrastructure work, the bid proposal must offer an escrow-account procedure for the retainage, with the escrow agreement due within 15 calendar days after notification.
Statute
Va. Code § 2.2-4333 (5% retainage); § 2.2-4334 (escrow option on local-government contracts).
What the statute says
In any public contract for construction that provides for progress payments in installments based upon an estimated percentage of completion, the contractor shall be paid at least ninety-five percent of the earned sum when payment is due, with no more than five percent being retained to ensure faithful performance of the contract.
Va. Code § 2.2-4333 (5% retainage); § 2.2-4334 (escrow option on local-government contracts). · Official text · retrieved 2026-09-22

Who this applies to

Virginia sets a retainage limit for public construction and leaves private construction to the parties.

Public projects. Section 2.2-4333 reaches any public contract for construction that pays in installments based on an estimated percentage of completion [1]. Subcontracts on public projects are held to the same limit as the prime contract.

Section 2.2-4334 adds an escrow option for some local-government work [2]. When a local-government contract of $200,000 or more [2] is for highways, roads, streets, bridges, parking lots, demolition, clearing, grading, excavating, paving, pile driving, drainage structures, or water, gas and sewer lines and pumping stations, the bid proposal must offer an escrow-account procedure for the retainage.

Private projects. No statewide statute fixes a retainage percentage or a release date for private construction in Virginia, so the contract controls both. Section 11-4.6, the 2022 "SB 550" payment-terms law, stays out of the question in so many words: its 60-day payment requirement neither applies to nor prohibits retainage provisions in a construction contract [3].

What the rule says

Section 2.2-4333 starts from the payment side [1]. When a progress payment falls due, the contractor must receive at least 95% of the earned sum [1], which means no more than 5% [1] may be retained, and the statute gives the purpose of that holdback as ensuring faithful performance of the contract. The section sets no separate deadline for giving it back; it says only that all amounts withheld may be included in the final payment.

For private work, what matters about § 11-4.6 is what it leaves out [3]. Interest penalties under § 2.2-4355 apply to late payment of invoiced amounts under § 11-4.6 [3], but the subsection that sets those payment terms is carved out from retainage, so the penalties do not reach retainage.

How to comply

For a public contract:

For a private contract, the retainage clause is the rule that applies. Its percentage and its release terms are whatever the parties wrote, and the payment-terms penalty in § 11-4.6 does not reach retainage [3].

What changed recently

Section 2.2-4333 began as § 11-56, enacted in 1982 (chapter 647), and was recodified into the Virginia Public Procurement Act in 2001 (chapter 844) [1]. Section 11-4.6's history is more recent and more crowded: 2020 (chapter 1038), a 2021 special session (chapter 511), 2022 (chapters 726, 727 and 771), 2023 (chapters 675 and 676) and 2026 (chapter 1040) [3].

Related

Run the numbers for Virginia

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. Va. Code Sec. 2.2-4333, Retainage on construction contracts (retrieved 2026-09-22)
  2. Va. Code Sec. 2.2-4334, Deposit of certain retained funds on certain contracts with local governments (retrieved 2026-09-22)
  3. Va. Code Sec. 11-4.6, Required contract provisions in construction contracts (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.