South Dakota Retainage Frequently Asked Questions

The word “retainage” can strike fear into the hear of anyone in the construction industry. The concept has two general purposes: (1) To provide an incentive to the contractor or subcontractor to complete the project; and (2) To give the owner some protection against problems like liens, contractual defaults, delays, and more.  In most states, laws exist to regulate how the parties use the retainage concept, mostly protecting some parties against abuse of the tool from others.  The following are resources, legal information, and frequently asked questions about South Dakota’s retainage requirements as they related to public projects.  The South Dakota retainage statute is in S.D. CODIFIED LAWS § 7-25-10.  View the full text of South Dakota’s retainage statute.

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Frequently Asked Questions

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South Dakota Retainage FAQs

Does South Dakota limit the amount of retainage can be withheld from a contractor?

For county projects, retainage is on a sliding scale based on contract amount.  Contracts less than $50,000 cannot have retainage less than 12%.  For projects between $50,000 and $250,000, retainage shall not be less than 12% on the first $50,000 and 5% on the next $200,000.  For projects over $250,000, retainage shall not be less than 12% on the first $50,000, 5% on the next $200,000, and 2.5% on the remaining contract amount.

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How long can a party withhold retainage in South Dakota?

Payment due 60 days after the work under the contract has been completed.

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Does South Dakota require retained funds be deposited in a special account?  Can securities be substituted for retainage?

Not specified in statute.

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How can I make a claim to recover retainage in South Dakota?

Completion date is either established in superintendent’s or architect’s letter of acceptance or by the use and occupancy of the building.

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Is there a specific notice required to recover retainage in South Dakota?

See above.

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