Source: https://www.levelset.com/exchange/retainage/connecticut-retainage-law/
Timestamp: 2019-04-20 06:42:54
Document Index: 747775657

Matched Legal Cases: ['§ 42', '§ 49', '§ 49', '§ 49', '§ 3', '§ 42', '§ 42', '§ 42', '§ 42', '§ 49', '§ 49', '§ 3']

Connecticut Retainage Laws - FAQs and Resources | Levelset
Connecticut Retainage Overview
Retainage serves two general purposes: (1) To provide an incentive to the contractor or subcontractor to complete the project; and (2) To give the owner some protection against problems like liens, contractual defaults, delays, and more. In most states, laws exist to regulate how the parties use the retainage concept, mostly protecting some parties against abuse of the tool from others. The following are resources, legal information, and frequently asked questions about Connecticut’s retainage requirements. The Connecticut retainage statutes are reproduced below on this page.
Connecticut Retainage for Private Projects FAQs
Does Connecticut limit the amount of retainage that can be withheld from a contractor?
The maximum retainage allowed is 5% of the estimated amount of payment throughout the project.
How long can a party withhold retainage in Connecticut?
An owner must pay any party in direct contractual relationship with them within 30 days of request of payment. Contractors must pay subcontractors and suppliers within 30 days of receiving payment.
Does Connecticut require retained funds be deposited in a special account? Can securities be substituted for retainage?
An escrow account must be established for all the retainage withheld. Securities can be substituted for retainage.
How can I make a claim to recover retainage in Connecticut?
A contractor, subcontractor, or supplier shall make a claim through a notice by registered or certified mail. 10 days after receipt of the notice, the recipient will be liable for interest on the amount due, owing at a rate of 1%/month.
Is there a specific notice required to recover retainage in Connecticut?
Connecticut Retainage for Public Projects FAQ
The Department of Works or State Agency projects (excluding the Department of Transportation projects) have a maximum retainage rate of 10%. The Department of Transportation projects have a maximum retainage rate of 2.5% both for payments from the public entity to an original contractor and from payments from an original contractor to subcontractors. Municipal contracts have a maximum retainage rate (for both public entity and contractor) of 5%.
General contractors (and subcontractors) must pay subcontractors within 30 days of receiving payment.
The contractor or subcontractor may substitute securities. Any interest accrued shall be paid to the contractor or subcontractor.
This is not specified in the Connecticut retainage statute for public projects.
Connecticut Retainage Statutes
Getting informed about prompt payment laws is important. An examination of Connecticut’s retainage laws, the rules and regulations related to the amount and timing of allowable retained payments, is important to know your rights and responsibilities as a party on a construction project. Connecticut’s specific laws can be found in: Conn. Gen. Stat. §§ 42-158j-42-158r, § 49-41b(1), § 49-41b(2),§ 49-41b(3) and § 3-112a, and are reproduced below.
§ 42-158j: Required Contract Provisions RE Timely Payment of Contractors, Subcontractors and Suppliers. Payment Requisition Statement. Remedy for Untimely Payments. Penalties. Escrow Accounts. Withholding Payments Due Because of Disputes Prohibited. Progress Payments. Rights of Action.
§ 42-158k: Retainage Limitation
No construction contract may provide for any retainage in an amount that exceeds five per cent of the estimated amount of a progress payment for the life of the construction project.
§ 42-158p: Retainage Escrow Accounts. Monthly Reports. Combining Accounts. Termination of Accounts. Fees and Expenses. Form and Provision of Account. Failure to Deposit or Release Retainage. Acceptance of Securities
An escrow account shall be established for all retainage, subject to the following:
§ 42-158r: Enforcement of Retainage and Adjudication in this State
In an action to enforce the provisions of section 42-158k, 41-158m or 42-158p, a court may award court costs and reasonable attorney’s fees to the prevailing party.
§ 49-41a: Enforcement of Payment by General Contractor to Subcontractor and by Subcontractor to its Subcontractors
§ 49-41b: Release of Payments on Construction Projects
(1) In the case of a contract advertised by the Department of Construction Services or any other state agency, except as specified in subdivision (2) of this section, (A) the awarding authority shall not withhold more than ten per cent from any periodic or final payment which is otherwise properly due to the general or prime contractor under the terms of such contract, and (B) any such general or prime contractor shall not withhold from any subcontractor more than (i) ten per cent from any periodic or final payment which is otherwise due to the subcontractor, or (ii) the amount withheld by the awarding authority from such general or prime contractor under subparagraph (A) of this subdivision, whichever is less. Notwithstanding the provisions of this subdivision (1), the awarding authority shall establish an early release program with respect to periodic payments by general or prime contractors to subcontractors.
§ 3-112a: Substitution of Securities for Retainages on State Contracts and Subcontracts
(a) Under any contract made or awarded by the state, or by any public department or official thereof, or under any subcontract made directly thereunder with the contractor, the contractor and any subcontractor may, from time to time, withdraw the whole or any portion of the amount retained for payments to the contractor or subcontractors, as the case may be, pursuant to the terms of the contract or subcontracts, upon depositing with the Comptroller (1) United States Treasury bonds, United States Treasury notes, United States Treasury certificates of indebtedness or United States Treasury bills, or (2) bonds or notes of the state of Connecticut or (3) bonds of any political subdivision in the state of Connecticut. No amount shall be withdrawn in excess of the market value of the securities at the time of deposit or of the par value of such securities, whichever is lower.