Who this applies to
RCW 60.28.011 is expressly limited to public improvement contracts and public bodies [1], and this page deals only with that public-work rule. On a private project, the retainage terms are for the contract, and a lawyer who has read it, to settle.
Within public work, the statute touches three parties:
- The public body reserves retainage of no more than 5% [1] of the moneys the contractor earns.
- The contractor has that money held as a trust fund protecting two things: the claims of any person arising under the contract, and the state's claim for taxes.
- Lower tiers. A contractor or subcontractor may withhold no more than 5% [1] from the tier below it, and it owes that tier interest at the rate it receives on its own reserved funds.
Contracts funded wholly or partly with federal transportation funds work differently: they rely on the contract bond instead of retainage.
What the rule says
The 5% [1] figure is a ceiling on reservations from moneys earned, and any other reservation from moneys earned is prohibited. The amount can fall during the job. At any time, the contractor may ask for retainage to be reduced to 100% [1] of the value of the work remaining on the project. After all work other than landscaping is complete, the contractor may request full release, with 5% [1] of moneys earned for landscaping still retained.
Release in full is due 60 days [1] after completion of all contract work, subject to chapter 39.12 RCW, the prevailing wage chapter, and to chapter 60.28 itself [1]. On the general contractor/construction manager delivery method, the release trigger can instead be acceptance of a completed subcontract, followed by a 45-day lien-notice period under RCW 60.28.021 [1].
How to comply
- Compare the contract's retainage clause with 5% [1] of moneys earned, and a subcontract's with the same 5% [1] limit on withholding from a lower tier.
- Mark the 60-day [1] date from completion of all contract work; that is when the public body owes full release and payment.
- A bond can take the place of the cash. Under RCW 60.28.011(6), a surety bond may be substituted for retainage, and the bonded retainage is released within 30 days [1].
- Follow the interest. When retainage is deposited in an interest-bearing account or escrow, the interest is paid to the contractor.
The section itself sets no penalty for late release. The full text of RCW 60.28.011, the contract and the release procedure in RCW 60.28.021 are the places to confirm how a given job closes out [1].
What changed recently
The section was last amended by 2017 c 302 s 1 [1]. Earlier entries in its history include 2015 c 280, 2013 c 113 and 2011 c 231 [1], two 2009 chapters (c 432 and c 219) and, at the oldest end, 1992 c 223 [1].
Related
- Retainage calculator: see how much a percentage holdback ties up on a public job.
- Retainage laws by state: Washington's public-work rule next to the rest of the country.