Louisiana 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.

Private projects in Louisiana: the retainage escrow account

Louisiana doesn't cap retainage on private work. The contract sets the percentage. What the law does require is an escrow account: under La. R.S. 9:4857, when an owner-contractor contract is $50,000 or more and the owner withholds retainage from progress payments, the owner must deposit it "into an interest bearing escrow account."

• A neutral escrow agent. The account is held at a qualified financial institution under the control of an escrow agent, both chosen by mutual agreement of the owner and the contractor.
• Exempt projects. Single- and double-family residences, and certain industrial facilities, including power generation, petroleum and chemical plants, paper and wood products, primary metals, pipelines and waste facilities.
• Owner-contractor contracts. The statute covers the owner's contract with the contractor. It doesn't specifically address retainage between a contractor and its subs.

The escrow rule was enacted in 2010 (Act 638) and moved to its current section in 2019.

How retainage is released on private Louisiana jobs

Situation: Release from escrow

No claims by the owner: All of it, within 3 business days after the escrow agent gets a written release signed by the owner and contractor

Disputed amounts: The undisputed amount within 3 business days of the contractor's notarized request; the disputed amount within 3 business days of a final court or arbitration order

There's no statutory deadline for when private retainage becomes due. That follows the contract, and owners commonly hold it until the lien period runs. Under the Private Works Act (La. R.S. 9:4822), lien deadlines generally run 30 to 60 days after a notice of termination or substantial completion, depending on your role and whether a notice of contract was filed.

Louisiana prompt pay after the 2026 changes

Act 822 of 2026 rewrote the private prompt pay statute, La. R.S. 9:2784, effective August 1, 2026.

• Owner to contractor: within 35 days of a written payment request, less amounts withheld as the law or contract allows. Single-family residence contracts can allow up to 61 days.
• Contractor to subs and suppliers: within 7 days of receiving payment, down from 14. Each lower tier pays within 7 days too.
• Late payment: 1.5 percent per month with no cap, plus attorney's fees to the prevailing party. Undisputed amounts must be paid even when part of the bill is disputed.
• No waivers. A contract that waives the statute is "absolutely null." Oil and gas work and public contracts are excluded.

Public projects in Louisiana: 10% and 5%

Contract value: Maximum retainage

Under $500,000: 10%

$500,000 or more: 5%

• The 45-day hold. Retainage may be held until 45 days after formal acceptance of the work is recorded, or after notice of default (La. R.S. 38:2248).
• Punch lists. Since 2022, punch lists must carry the design professional's cost estimates, and the agency can't withhold more than the punch list's value (except DOTD).
• Paying the contractor. Progress payments are due within 45 days of a certified pay request, and final payment within 45 days of a clear lien certificate. Late payment carries 0.5 percent a day, capped at 15 percent (La. R.S. 38:2191).
• Securities instead of cash. A contractor can withdraw retainage by depositing Louisiana certificates of deposit (La. R.S. 38:2249). This doesn't apply to DOTD projects.

Does retainage earn interest in Louisiana?

On private contracts of $50,000 or more, yes. The escrow account has to be interest-bearing, and at completion the funds, "including any interest," are released to the contractor. On public work, interest on certificates of deposit pledged in place of retainage belongs to the public entity until substantial completion.

The money involved is real. $500,000 of retainage held for 18 months earns about $28,500 at 3.7% compounded monthly. Where nothing requires an escrow account, that interest usually stays with whoever holds the money.

Retainage escrow for Louisiana projects

On private Louisiana jobs of $50,000 or more, the escrow account is required. Retain-Edge is built to run it: a segregated escrow account at a partner bank, a balance for every contractor, and the interest paid to the GCs and subcontractors who earned it. Retain-Edge never holds, lends or invests the funds, and is now enrolling pilot projects.

Get early accessCalculate your interest

How to get retainage released faster

1. Read the retainage clause before you sign. Look for the percentage, whether release is by scope or only at final completion, and what documents release requires.
2. Agree on the escrow agent early. The owner and contractor choose the escrow agent together. Settling it at contract signing avoids delays at release.
3. Build the closeout package as you go. Collect warranties, O&M manuals, as-builts and certifications with your monthly pay apps instead of chasing them at the end.
4. Send the joint release promptly. With no owner claims, the escrow agent has to release funds within 3 business days of a release signed by both parties.
5. Ask for scope-level release. If your scope is finished, ask for your retainage to be released when your scope clears, not when the last trade finishes. Many contracts allow it.

Louisiana retainage FAQ

Is there a maximum retainage on private jobs in Louisiana?+

No. The contract sets it. But on owner-contractor contracts of $50,000 or more, retainage must go into an interest-bearing escrow account, except on one- and two-family residences and certain industrial facilities (La. R.S. 9:4857).

What is the maximum retainage on Louisiana public jobs?+

10 percent on contracts under $500,000 and 5 percent on contracts of $500,000 or more (La. R.S. 38:2248).

Who picks the escrow agent on a private Louisiana job?+

The owner and the contractor, by mutual agreement.

Who gets the interest on escrowed retainage in Louisiana?+

At completion, the funds, including any interest, are released to the contractor.

When is public retainage released in Louisiana?+

It may be held until 45 days after formal acceptance of the work is recorded. Final payment is due within 45 days of a clear lien certificate, with late interest of 0.5 percent a day, capped at 15 percent.

How fast must a GC pay subs in Louisiana?+

Within 7 days of being paid, since August 1, 2026. Late amounts carry 1.5 percent per month with no cap, plus attorney's fees.

How long does a private owner have to pay in Louisiana?+

35 days from a written payment request, or up to 61 days on single-family residence contracts. The rule can't be waived.

Retainage guides for other states

California5% cap · 2%/mo late penaltyConnecticut5% cap · mandatory escrowFlorida5% public cap · 2%/mo lateGeorgia5% public cap · 10-day flow-downKentucky10%/5% caps · escrow at $2M+New York5% cap · void above itNorth Carolina5% public cap · 50% stopOregon5% cap · retainage bondsTennessee5% cap · escrow at $500K+Texas10% reserve · public caps