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What Is The Colorado Retainage Law For Private Construction Contracts?

Posted January 08, 2024 in Uncategorized

What Is The Colorado Retainage Law For Private Construction Contracts?

RETAINAGE LAWS HAVE CHANGED IN COLORADO. IF YOU ARE INVOLVED IN NEGOTIATING A NEW CONSTRUCTION PROJECT, YOU NEED TO REVIEW THE STATUTE BELOW AND UPDATE YOUR CONTRACTS ACCORDINGLY.

C.R.S. 38-46-103. PRIVATE CONSTRUCTION CONTRACTS – RETAINAGE – CONDITIONS PRECEDENT.

(1) A property owner, contractor, or subcontractor shall not withhold as retainage more than five percent of the price of the work completed under the contract or subcontract. Making a partial payment under this subsection (1) is not acceptance or approval of some of the work or of a waiver of defects in the work.
(2) This article 46 addresses only the amount of retainage that may be withheld by a property owner, contractor, or subcontractor and does not change, override, or invalidate any other provision in a contract, subcontract, or supply agreement. Such a provision includes, but is not limited to:
(a) A provision relating to timing of a payment, including final payment;
(b) A provision requiring satisfactory performance of the work of the contract, subcontract, or supply agreement before payment is due;
(c) A provision allowing a property owner, contractor, or subcontractor to withhold payment or deduct from any payment otherwise due any backcharges or other amounts as authorized by the contract, subcontract, or supply agreement; or
(d) A provision relating to a condition precedent that must be satisfied before a payment is due to a contractor, subcontractor, sub-subcontractor, or supplier. A condition precedent includes a requirement that:
(I) A contractor must actually receive payment from the property owner to be obliged to make payment to a subcontractor or supplier; or
(II) A subcontractor must actually receive payment from the contractor to be obliged to make payment to a subsequent subcontractor or supplier.

C.R.S. 38-46-103 (emphasis added) (statute as of April 2023). Of note, this law exempts contracts between private owners and contractors for construction of projects that exceed a price of $150,000. Single-family dwellings or quad multi-family dwellings are exempt. C.R.S. 38-46-102.

For More Information on retainage language in construction contracts, See our practice page on drafting construction contracts in Colorado.

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