Retainage Claims FAQ's
What is retainage?
Retainage is a pool of funds deducted from a contractor's progress payments during a project.
The purpose of the retainage fund is to allow the owner additional security, to protect the owner from claims of unpaid subcontractors and suppliers, as well as state and local tax obligations incurred during the job.
On public works projects, the owner generally withholds 5% of a contractor's progress billings to fund the retainage.
By statute in Washington, the retainage is held in trust.
Who can make a claim against retainage held on a Washington public works project?
All persons who furnish labor, materials, or equipment for use in the performance of public works projects have a right to make a claim against the retainage.
However, those who supply materials to other suppliers do not have lien rights against the retainage.
Do I need to file a pre-claim notice before making a claim on retainage held on a Washington public works project?
In some cases, yes. If you are a subcontractor that contracted directly with the prime contractor, you do not need to give a pre-claim notice to make a retainage claim.
However, when materials are supplied by someone other than the subcontractor (i.e. a third party who has no direct contractual relationship with the prime contractor), that supplier must provide a conforming pre-claim notice to the prime contractor by either personal delivery or via certified mail within 10 days of supplying materials to the public works project.
Failure to provide such notice will be a bar to the supplier's right to place a lien on the retainage.
Do I need to file a Notice of Claim in order to make a claim on retainage held on a Washington public works project?
Yes. Anyone claiming an interest in the retainage on a Washington public works project must file a Notice of Claim on the Retainage within the applicable time period.
Your Notice of Claim on Retainage must include the name of the public owner, your name, a description of the nature of the work performed, and the amount of money you are claiming.
It must also be signed and specifically include a statement that you are making a claim on the retainage.
Where do I file my Notice of Claim on retainage held on a Washington public works project?
Your Notice of Claim must be filed with the public owner by either personal service or via certified mail with return receipt requested.
How long do I have to file a Notice of Claim on retainage held on a Washington public works project?
Any subcontractor making a claim on the retainage fund must provide the public owner with a Notice of Claim within 45 days after the completion of the project.
How long does my Notice of Claim on retainage held on a Washington public works project last?
Your Notice of Claim on retainage will be good for 4 months from the date that it is filed. In order to enforce your Notice of Claim on the retainage fund, you must commence a lawsuit in the superior court in the county where the public works project is located.
How does filing my Notice of Claim on retainage held on a Washington public works project help me get paid?
When a subcontractor timely files a Notice of Claim on the Retainage, that subcontractor will have a lien on the retainage fund.
A lien is a legal interest in the funds that can be enforced by filing suit against the public entity as the custodian of the retainage fund.
The goal of the lawsuit is to have the superior court direct the public owner to distribute the funds to satisfy your claim.
What if there are multiple claims to the same retainage held on a Washington public works project?
Some retainage claims are superior to others.
For example, local taxes and assessments must be paid to the Department of Labor & Industries, Department of Revenue, and Employment Security before the retainage is paid to a subcontractor.
As for between subcontractors with competing claims, it is possible that a superior court would direct the balance of the retainage to be paid in proportion to each subcontractor's claim, but the retainage statute does not provide explicit direction.
What do I do if a retainage bond has been posted?
If a retainage bond has been posted, then you must make a claim in the same manner as against the retainage fund.
The same deadlines applicable to a retainage claim apply to a retainage bond.
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