Highlight In Legal Maryland Construction Forms For Free

What is Retainage? Retainage is the withholding of a portion of the funds that are due to a contractor or subcontractor until the construction project is finished. It is meant to serve as a financial incentive and an assurance that the contractor will complete the project in a satisfactory manner.

Retainage also safeguards against defects that may be discovered after project completion. Retainage will be released once a project is successfully completed, which means construction businesses may operate at a loss until then. That's where ?retention bonds? come in.

A Notice of Commencement is a document that establishes the formal start date of a construction project. It identifies stakeholders such as the property owner, lender, and GC. NOCs are filed in the county the project if located in, and usually posted at the job site and distributed to all participants.

Maryland's retainage limits and deadlines As for the timing of the release of retainage. On private projects, retainage must be released by the property owner no later than 90 days after substantial completion. Once payment is received, retainage should be released to subs and suppliers within 7 days.

Retainage, a standard practice in both public and private projects, functions as a financial incentive and guarantees that the project is completed to the owner's satisfaction. The amount held back is typically defined in the contract, and usually ranges between 5% and 10% but can sometimes be higher.

Deposit and Payments A contractor cannot accept more than 1/3 of the contract price as a deposit and may not accept any payment until the contract is signed. The agreed upon price of the home improvement contract should be clearly stated.