Finance · Retainage
Retainage and lien waiver tracking
Get your last five percent back. Track every dollar of retainage per line and per job, apply the state cap, forecast when it releases, and generate the right lien waiver with the right numbers at the right time.
In short
Retainage
Retainage, also called retention, is a percentage of each construction progress payment, commonly 5 to 10 percent, withheld by the owner or general contractor until the work is substantially complete. It accumulates across every payment, so the cumulative held balance is tracked per job, and many contracts or state laws step the rate down at a milestone.
| Private retainage (ASA / Clemson study, Bausman 2004) | 7.59% withheld |
| California and New York cap | 5% maximum |
| Lien waiver types | 4: conditional or unconditional, progress or final |
The problem
Retainage is your profit, held hostage by paperwork.
Retainage often represents the bulk of a job’s margin, withheld a few percent at a time across every payment until the end of the project. Tracked in scattered spreadsheets, it is easy to lose sight of how much is outstanding, on which project, held by whom, and when the terms say it should come back.
Lien waivers are the other half of the trap. The wrong type, the wrong amount, or the wrong timing can delay a payment or give up rights before the money actually clears. Conditional versus unconditional and progress versus final are not interchangeable, and the exchange happens on every pay cycle.
Buildalytic tracks retainage per project and counterparty, forecasts release against contract terms, and generates the correct waiver with the right amount and date, so nothing is signed early and nothing is left uncollected.
The retainage ledger
Every dollar held, per line and per job.
Retainage is withheld a few percent at a time across dozens of payments, so the outstanding total is nearly impossible to hold in a spreadsheet. Buildalytic tracks the held balance, applies the step-downs, and knows the release trigger.
Held per line and per job
Withheld amounts tracked to the dollar per line, per job, per counterparty, and per pay period, so the balance is right at closeout.
Step-downs applied
The rate reduces at the contract or statutory milestone, such as 10 percent to 5 percent at 50 percent complete.
State caps enforced
The applicable limit, from 5 to 10 percent by jurisdiction, applied automatically, so a contract that over-withholds is caught.
Release on the deadline
Release dated to substantial completion and the state deadline, so the held balance gets billed the day it is due, not left on the table.
The right waiver, every payment
The correct conditional or unconditional, progress or final waiver generated with the right amount, date, and format.
Payment gated on the waiver
The waiver rides with the payment, so no check goes out ahead of the waiver it needs, which is where double-payment and lien exposure come from.
The four waivers
The four waivers, never the wrong one.
Conditional or unconditional, progress or final: not interchangeable, and the wrong one gives up rights before the money clears. Buildalytic generates the right one and gates the payment on it.
Conditional progress
A mid-job waiver that only takes effect once the progress payment actually clears.
Unconditional progress
Takes effect on signing, so it goes out only after the progress payment is in hand.
Conditional final
The last payment’s waiver, effective only when that final payment clears.
Unconditional final
Releases all remaining rights on signing, used once final payment has landed.
In short
Retainage caps by jurisdiction
Retainage is a state-by-state patchwork, and the caps are tightening. These are general summaries for orientation, not legal advice. Statutes, thresholds, and release deadlines vary by project type and change, so confirm current rules for your project with counsel.
| Federal: 10% | FAR 52.232-5. Often reduced or waived once a project passes 50 percent with satisfactory progress. |
| California: 5% | Release within 45 days of completion; interest accrues on late release. |
| New York: 5% | Private contracts over $150k (SB 5655, Dec 2025); release within 30 days of acceptance. |
| Texas: 10% | Statutory retainage on lienable work; public release within 30 days. |
| Florida: 10 to 5% | Reduces to 5 percent once the project reaches 50 percent complete. |
| Illinois: 10 to 5% | Private non-residential: 10 percent to 50 percent complete, then 5 percent. |
| Tennessee: 5% | All public and private projects; retainage held in a separate escrow account. |
| Oregon: bond | Contractors may substitute a surety bond for withheld cash (HB 4006-A, 2024). |
| New Mexico: none | Retainage barred on most public and private work since the 2007 reform. |
The run
The whole retainage cycle, tracked to the release.
Track held
Apply the contracted rate to each schedule-of-values line and carry the cumulative held balance per job.
Step down
Reduce the rate at the contract or statutory milestone, such as 10 percent to 5 percent at 50 percent complete.
Reach the trigger
Watch substantial completion and the state release deadline so the release date is known, not guessed.
Collect the waivers
Gather the conditional and unconditional waivers from every tier that release requires.
Bill the release
Invoice the held retainage the day it is due, with the right waiver attached, so nothing is left uncollected.
In short
Lien waiver
A lien waiver is a document a contractor or supplier signs in exchange for payment, waiving the right to file a mechanic’s lien for that amount. There are four types, conditional or unconditional and progress or final, and using the wrong one can give up lien rights before payment actually clears.
In short
Retainage release
Retainage release is the payment of the accumulated withheld balance back to the contractor, typically triggered by substantial completion, a resolved punch list, final inspections, and collection of final lien waivers from every tier. Many states require release within 30 to 45 days of completion and charge interest on late release.
What is a typical retainage percentage?
Retainage is most commonly 5 or 10 percent of each progress payment. Private work measured 7.59 percent in the ASA and Clemson University study (Bausman, 2004). The exact rate depends on the contract, whether the project is public or private, and the state, and some contracts reduce the rate partway through the job.
Is there a legal cap on how much retainage can be withheld?
Often yes, and it varies by state and project type. Federal projects cap it at 10 percent under FAR 52.232-5. Many states, including California and New York, cap it at 5 percent, others allow 10 percent or require a step-down, and a few, like New Mexico, prohibit retainage on most work. A withholding that exceeds the state limit is generally invalid.
What is a retainage step-down?
A step-down reduces the retainage rate once the project reaches a defined milestone, most often 50 percent complete. For example, a contract or statute may allow 10 percent until the halfway point and then require reduction to 5 percent, or release half of the accumulated retainage. Buildalytic applies the step-down automatically so the held balance is correct.
When must retainage be released?
Release typically begins at substantial completion, once the punch list is resolved, final inspections pass, and final lien waivers are collected from every tier. Many states require release within 30 to 45 days of completion or acceptance. The exact deadline is set by the contract and the applicable state prompt-payment statute.
What happens if retainage is held past the deadline?
If retainage is not released when legally required, your options include a formal demand letter citing the statute, a mechanic’s lien if the deadline has not passed, and litigation. Many states charge interest on retainage held past the release deadline, commonly 1 to 2 percent per month, which gives owners a strong incentive to release on time when you enforce the deadline.
What are the four types of lien waiver?
The four are conditional progress, unconditional progress, conditional final, and unconditional final. Conditional versus unconditional is about whether the waiver takes effect only once payment clears or immediately on signing. Progress versus final is about whether it covers a single progress payment or the entire remaining balance. Using the wrong one can waive rights before you are paid.
What is the difference between a conditional and an unconditional lien waiver?
A conditional waiver only becomes effective once the payment it references actually clears, so it is safe to send before you have the money. An unconditional waiver takes effect the moment it is signed, whether or not payment has arrived, so it should only go out after the funds are in hand. Sending an unconditional waiver too early gives up lien rights for free.
Does Buildalytic gate payment on lien waivers?
Yes. The required conditional and unconditional waivers ride with the payment, and the payment is held until the right waiver is received, so no check goes out ahead of its waiver. That no waiver, no payment gate is where double-payment and lien exposure are prevented, rather than being flagged after the fact.
What is the retainage lien-deadline catch-22?
A subcontractor’s deadline to file a mechanic’s lien can pass before retainage is even due for release, since release waits for project completion. Waiting to file risks losing lien rights, while filing early can strain the relationship. Tracking both the lien deadline and the release trigger together lets you make that call deliberately instead of missing a date.
Why does retainage hurt subcontractors the most?
Subcontractors usually do not receive their retained funds until the general contractor collects from the owner, often not until the whole project is done. On a 10 percent job, the amount withheld can exceed a subcontractor’s typical 5 to 6 percent net margin (CFMA), so retainage effectively holds a sub’s entire profit as a working-capital constraint for months or years.
Have retainage laws changed recently?
Yes, and the trend is toward tighter caps and faster release. Recent reforms include New York SB 5655 (2025), capping private retainage at 5 percent over $150k, Mississippi SB 2762 (2024) capping private work at 5 percent, Illinois HB 1224 (2025), and Oregon HB 4006-A (2024) allowing a surety bond in place of withheld cash. Buildalytic keeps the applied caps current.
Can I substitute a bond or securities for retainage?
In many states, yes. Public contracts often allow a contractor to deposit securities or a surety bond in lieu of cash retainage and keep any interest earned, and a growing number of states extend this to private work. Oregon’s 2024 reform lets contractors bypass cash retainage with a surety bond entirely. The option depends on the state and the contract.
Does Buildalytic move the money or replace my ERP?
No to both. Buildalytic tracks retainage, forecasts the release, and generates and gates the lien waivers, but the payment itself moves through your existing bank and ERP, and your ERP stays the ledger. Buildalytic handles the retainage and waiver logic a general accounting system leaves to a spreadsheet, then posts the release back.
See your retainage in one ledger.
We will show retainage tracked by project and counterparty, the release forecast, and the correct waiver generated for each payment.
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