Florida retainage law: a plain-English guide for contractors

What is retainage in construction?

Retainage (also called retention) is the part of each progress payment the owner holds back until the work is finished. The general contractor usually passes the same percentage down to its subcontractors, so everyone in the chain has money held back.

"5% retainage" means that on a $200,000 pay application, $10,000 is withheld and $190,000 is paid. Over a long job the held amount adds up: on a $4 million subcontract at 5%, $200,000 is sitting with someone else by the end of the work. On your books it's a retainage receivable. On the GC's or owner's books it's retainage payable.

Retainage exists to give the owner leverage to get the work finished and to protect against unpaid subcontractors and suppliers filing liens. It also means contractors finance part of the project with their own earned money, often for a year or more.

Florida's 5% retainage cap on public projects

On public work, Florida caps retainage at 5 percent of each progress payment. There's no higher rate for the first half of the job. The flat 5 percent cap replaced the old "10 percent until 50 percent complete, then 5 percent" rule in 2020, and the 2023 amendments kept it.

• State agencies. A public entity may withhold no more than 5 percent of each progress payment (F.S. 255.078). This is part of the Florida Prompt Payment Act, which covers the state and its agencies, not cities and counties. Work for the Department of Transportation is excluded from the act's definition of construction services (F.S. 255.072).
• Local governments. Counties, cities, school boards, school districts, special districts and other political subdivisions face the same 5 percent cap under the Local Government Prompt Payment Act (F.S. 218.735(8)).
• Small contracts are excluded. The cap doesn't apply when the total cost of the construction services in the contract is $200,000 or less.
• Some federal money is excluded. The cap doesn't apply to work paid for in whole or part with federal funds when federal grant rules conflict with the prompt payment act.
• Lower is allowed. The owner can hold less than 5 percent, step the rate down on a schedule in the contract, or release retainage early. When the owner releases retainage tied to a sub's or supplier's work, the contractor must pass it on promptly.
• Disputes. The owner doesn't have to release amounts under a good faith written dispute or a claim under the public payment bond statute, F.S. 255.05.

The 5 percent sections are written as limits on what the public owner withholds from the prime contractor. They don't contain a separate cap on what the prime holds from its subs. Check your subcontract, and check with counsel if a sub is being held at more than 5 percent on a public job.

Retainage on private projects in Florida

Florida has no percentage cap on private-project retainage. The rate is whatever the contract says. Private work falls under the Construction Contract Prompt Payment Law (F.S. 715.12), which applies to written contracts to improve real property where a construction lien is available under Chapter 713. It controls timing and interest, not the percentage.

• Retainage has to be agreed. The statute allows an owner and contractor, and each tier below them, to agree that part of each progress payment will be withheld.
• Owner to contractor. Retainage is due within 14 days after substantial completion is certified by the architect or engineer, a certificate of occupancy issues, or the owner or its tenant takes possession, and the contractor has substantially completed the owner's written punchlist.
• Punchlist deadline. The owner must give the punchlist within the time in the contract, or within 15 days of the triggering event if the contract is silent. If no punchlist is given in time, interest starts 14 days after the triggering event.
• Down the chain. Between a contractor and its subs, retainage bears interest starting 14 days after it is due under the subcontract.
• Securities instead of retainage. A contractor or sub can withdraw retainage by depositing U.S. Treasury securities, Florida bonds or notes, or insured certificates of deposit from a bank or savings association authorized in Florida with the party holding the money. The amount withdrawn can't exceed the lower of market value or par value, and the holder must pass any interest earned on the securities to the depositor within 30 days of receiving it.

No Florida statute requires retainage to be held in a separate account or an interest-bearing account, on public or private work. Unless the contract says otherwise, the money sits with whoever holds it.

How long can retainage be held in Florida?

Who pays whom: Deadline

Local government to contractor: Punch list within 30 days of substantial completion (up to 45 on $10 million+ jobs if the contract says so). Balance less 150% of punch list cost within 20 business days. Final retainage on a proper request once the list is done, on the normal 20 or 25 business day payment clock.

State agency to contractor: Same punch list and 150% rule (F.S. 255.077). Retainage requests follow the same time limits as any payment request.

Public job: contractor to sub, sub to sub-sub: Within 10 days after the contractor is paid. Within 7 days after a sub is paid.

Private owner to contractor: Within 14 days after substantial completion, CO or possession, plus completion of the punchlist

Private job: contractor to sub: Per the subcontract. Interest runs from 14 days after it's due.

On public work, "the same time limits for payment of a payment request apply" whether or not the request includes retainage (F.S. 255.078(4) and 218.735(8)). For local governments, payment is due 20 business days after a proper invoice is stamped received, or 25 business days if an agent such as the architect must approve it first.

A newer rule reaches every licensed contractor. Since July 1, 2026, a licensed contractor must pay a sub or supplier within 45 days after being paid for that work, or as the contract says, unless there's a bona fide dispute over the amount (F.S. 489.1295). A knowing or willful violation can lead to license discipline. The statute doesn't mention retainage specifically, so check with counsel on how it applies to retainage.

Interest and late payment in Florida

Late public payments are expensive in Florida. State agency payments for construction services that miss the deadlines carry interest of 2 percent per month (F.S. 255.073(4)), and the contract can't take that away (F.S. 255.075). Local government payments carry 2 percent per month or the contract rate, whichever is greater (F.S. 218.735(9)). Since retainage requests follow the same time limits, late retainage on public work falls under these rates too.

On private work, late payments carry the state judgment interest rate under F.S. 55.03 plus 12 percent a year, starting on the 14th day after payment is due (F.S. 715.12). The Chief Financial Officer resets the judgment rate on a schedule, so check the current figure. You can't waive the right to interest before the payment is due. Interest isn't your only remedy.

None of that touches the interest retainage could earn while it's held on time. $500,000 of retainage held for 18 months earns about $28,500 at 3.7% compounded monthly. Florida doesn't require that money to sit in an interest-bearing account, so that interest usually stays with whoever holds the money.

Retainage that earns interest on Florida projects

With Retain-Edge, retainage sits in a segregated, interest-bearing account at an FDIC-insured partner bank, with a balance for every contractor, and the interest is paid to the GCs and subcontractors who earned it. Retain-Edge administers the account. It never holds, lends or invests the funds, and is now enrolling pilot projects.

Get early accessCalculate your interest

Public project closeout in Florida

Florida ties final retainage on public work to a single punch list. The contract must provide for a list of the items needed to finish the work, with an estimated cost to complete each one (F.S. 255.077 for the state, F.S. 218.735(7) for local governments).

• List deadline. 30 calendar days after substantial completion, or beneficial occupancy if the contract doesn't define substantial completion. On jobs of $10 million or more, the contract can extend that to 45 days. Multi-building and phased jobs get a list for each building or phase.
• Payment of the balance. Within 20 business days after the list is developed, and after a proper payment request, the owner pays the remaining contract balance less 150 percent of the estimated cost of the list items.
• Final retainage. Once every list item is complete, the contractor may request the rest. If completion of an item is disputed, the owner can keep up to 150 percent of that item's cost.
• Warranty work doesn't hold up final retainage. Neither does an insurance audit, and retainage can't be used to secure premiums under an owner's consolidated insurance program.
• If the owner misses the list deadline, the contractor may request all remaining retainage. That right doesn't apply where the contractor failed to cooperate in developing the list or perform its contract duties.

How to get retainage released faster

1. Read the retainage clause before you sign. Look for the percentage, any reduction schedule, whether release is by scope or only at final completion, and what documents release requires.
2. Know which law applies. State agency, local government and private jobs each run on different statutes. Contracts of $200,000 or less and some federally funded work fall outside the public 5 percent cap.
3. Push for the punch list on time. On public work, the 30-day list deadline starts at substantial completion. If the owner misses it, you may be able to request all remaining retainage.
4. Build the closeout package as you go. Collect warranties, O&M manuals, as-builts and lien waivers with your monthly pay apps. Florida private prompt pay depends on furnishing the affidavits and waivers the contract requires.
5. Send proper, dated payment requests. Florida's clocks run from receipt of a proper request. Keep proof of when each one was received.
6. Ask for scope-level release. Public owners may release retainage tied to finished work early. If your scope is done, ask for yours when it clears, not when the last trade finishes.

Florida retainage FAQ

What is the maximum retainage in Florida?+

On public projects over $200,000, 5 percent of each progress payment, for both state agencies (F.S. 255.078) and local governments (F.S. 218.735(8)). Florida has no statutory cap on private projects. The contract sets the rate.

Is it still 10% until the job is 50% complete?+

No. That was the public-project rule before October 1, 2020. Current law caps public retainage at 5 percent from the first pay application. Older contracts may still run under the old rule, so check with counsel on those.

Does Florida require retainage to be held in a separate or interest-bearing account?+

No. No Florida statute requires it on public or private work. On private jobs, F.S. 715.12 lets a contractor or sub pull retainage out by depositing qualifying securities with the party holding it, and the interest on those securities is paid to the contractor or sub.

When must retainage be released on a Florida public project?+

The punch list is due within 30 days of substantial completion (up to 45 on $10 million+ jobs if the contract allows). The balance less 150 percent of the list's cost is paid within 20 business days after that. Final retainage is due on a proper request once the list is complete, on the same clock as any payment request.

When must retainage be released on a Florida private project?+

Owner to contractor, within 14 days after substantial completion is certified, a certificate of occupancy issues or the owner takes possession, and the punchlist is substantially complete (F.S. 715.12). Between contractors and subs, it follows the subcontract, with interest starting 14 days after it's due.

What interest is owed on late retainage in Florida?+

On state agency work, 2 percent per month. On local government work, 2 percent per month or the contract rate, whichever is greater. On private work, the F.S. 55.03 judgment rate plus 12 percent a year, starting the 14th day after payment is due.

How fast does a GC have to pay subs in Florida?+

On public work, within 10 days after the contractor is paid, and a sub pays its own subs and suppliers within 7 days. Since July 1, 2026, every licensed contractor must pay subs and suppliers within 45 days after being paid, or per the contract, unless there's a bona fide dispute (F.S. 489.1295).

Retainage guides for other states

California5% cap · 2%/mo late penaltyConnecticut5% cap · mandatory escrowGeorgia5% public cap · 10-day flow-downKentucky10%/5% caps · escrow at $2M+LouisianaEscrow at $50K+ · 10%/5% publicNew York5% cap · void above itNorth Carolina5% public cap · 50% stopOregon5% cap · retainage bondsTennessee5% cap · escrow at $500K+Texas10% reserve · public caps