Illinois law sets maximum retainage on private projects

The change is expected to give contractors bigger checks earlier in project timeline.

September 12, 2019 |
Illinois law sets maximum retainage on private projects

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A new Illinois law sets the maximum retainage clients can withhold from contractor payments on private projects.

The change went into effect on August 20, and is expected to help many general contractors and subcontractors receive bigger checks earlier in the project timeline.

The new rule forbids customers from withholding more than 10% retainage from contractor payments, and orders retainage to be reduced to 5% after a contractor has completed half of the work.

The new law applies to all construction contracts. Twenty states have enacted legislation that caps private contract retainage at 10% or less. One state, New Mexico, prohibits any retainage from being withheld from a construction contract.

The legislation can be considered a codification of what already is standard industry practice. But, it should provide some relief because general contractors and subcontractors will be able to pay bills sooner with the additional 5%.

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