Retainage is nothing new in the construction industry. It’s a predetermined amount withheld to discourage contractors from leaving a project before work is completed. In its own way, retainage is meant to prevent conflict, but it can just as easily result in litigation when a public agency unfairly withholds payment. The maximum retainage amount on Florida public projects has been 10 percent; however, that could soon change.
Below, a Jacksonville construction lawyer discusses Florida House Bill 101 and its potential impact on contractors in the Sunshine State. If signed into law by Governor Ron DeSantis, this bill will take effect on Oct. 1, 2020. As always, the lawyers at Cotney Construction Law are here to keep professionals updated on the latest laws and happenings affecting the industry.
Awaiting a Signature
On Feb. 26, 2020, HB 101 was passed by the Florida Senate after a staggering 40-0 vote. It’s clear that Florida lawmakers are overwhelmingly in favor of lowering the retainage amount on public projects. If signed into law, this bill will apply to all public projects valued at $200,000 or more (consult a Jacksonville construction attorney for exceptions). Although public agencies are able to offer a lower retainage amount, the maximum amount that can be withheld on a project will be five percent of the contract value.
Related: Perfecting a Lien in Florida
Potential Changes to Florida Law
Contractors, take note! Under current Florida law, withheld amounts on public projects must be reduced to five percent at 50-percent completion. By contrast, the new five percent maximum would apply to the entire contract, meaning that it is not required to be halved at 50 percent completion, as is the current rule. So if an agency withholds five percent of the contract amount, they will no longer be required to lower this amount.
The remainder of Florida’s Prompt Payment Laws would remain unchanged. Once a project reaches substantial completion, a public agency will have 30 calendar days to remit payment if the project is less than $10 million in value (up to 60 days by extension on projects valued at $10 million or more).
A Big Win for Contractors
HB 101 has the clear support of Florida lawmakers. Assuming Governor DeSantis signs this bill into law, it would be a big win for Florida contractors, who are all too often stiffed out of payment for completed work. Although this lower retainage amount will make life easier for contractors, it in no way guarantees that public agencies will remit owed retainage upon substantial completion.
If you are considering pursuing litigation on a public project as a result of withheld retainage, consult a Jacksonville litigation attorney from Cotney Construction Law. Our experienced attorneys would be more than happy to draft a demand letter, file a mechanic’s lien, or pursue litigation on your behalf.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.