Public and private contractors take note of new law in Nevada that limits retainage for both public and private works contracts to five percent. Previously, for public works contracts, a public body undertaking a public work was permitted to withhold as a retainage at least five percent from progress payments made to a contractor during the first half of the project and, after completion of half of the project, the amount of the retainage became optional. Under amended Section 338.515(1) of the Nevada Revised Statutes (NRS), five percent must be withheld as retainage until 50 percent of the work required by the contract has been performed. In contrast to public works projects,
previously, for private works contracts, an owner and higher-tiered contractor was permitted to withhold as retainage up to ten percent of a progress payment. Under amended Sections 624.609(2)(a)(1) and 624.624(2)(a)(1) of the NRS, the amount that may be held as retainage is reduced from ten percent to five percent and, under amended Section 624.620(1)(b)(2) of the NRS, the retained funds must be paid upon the issuance of a temporary certificate of occupancy. Contractors should prepare for these changes, which apply to any contract entered into on or after January 1, 2016.
Additional Source: NCSB Industry Bulletin, Construction Retention on Public and Private Works Projects Changes January 1, 2016