Are you familiar with the concept of retainage? Retainage is a withheld portion of a contract’s total price that is awarded once the project has been completed. This withholding isn’t intended to call into question a contractor’s quality of work; rather, it’s intended to incentivize them to see the project through till the end.
Contractors who only work with a handful of long-term clients may not be familiar with strict retainage rules inherent to public projects, but the majority of contractors will be forced to deal with retainage at some point. When it comes to public projects, retainage is always going to play a role in the payment process. Contractors should be prepared to have around ten percent of the contract price withheld. As you know, this is approximately the value of the contractor’s cut. In other words, once the project has been completed, the contractor is rewarded with their share of the loot. It’s more nuanced than this, but we’ll cover that momentarily.
If you are a contractor who is dealing with missing payments or nonpayment, consult a Jacksonville construction lawyer to learn about your rights. Our experienced team has helped countless contractors obtain due payment by going directly after the owners who refuse to pay. Our team is dedicated to providing aggressive, dependable legal services exclusively for the construction industry. When it comes to construction-related disputes, you can count on the Jacksonville construction lawyers at Cotney Construction Law.
Related: How to Navigate Retainage Challenges
Florida Statutes stipulate that a contractor is permitted to request payment for up to one-half (5 percent) of the retainage amount ( no more than 10 percent of the contract amount) once they have completed fifty percent of a public project. Essentially, you can collect half of your cut once half the project is complete. It’s a good-faith sign that you’re not the one taking all the risk (even if it doesn’t necessarily feel that way) and it should give you the motivational boost you need for a successful project finish.
Avoiding Cash Flow Issues
Florida law states that retainage must be paid within 30 days (60 days on projects over $10 million) of project completion. Keeping the timeframes discussed throughout this article top of mind is crucial for contractors who wish to stay competitive and profitable in an industry plagued by cash flow issues. If you are dealing with a retainage-related payment dispute and would like to learn more about filing a claim on retainage, consult a Jacksonville construction lawyer.
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.