Tennessee
Retainage FAQs

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 Tennessee’s retainage requirements as they related to private projects. The Tennessee retainage statute is in TENN. CODE ANN. §§ 4-15-102, 12-4-108, 66-34-103, 66-34-104.  View the full text of Tennessee’s retainage statute.

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Percent That Can Be Retained
Retainage is limited to not more than 5% on all projects.
Time Period Funds Can Be Retained
Retainage must be released to the original contractor within 90 days from substantial completion.

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Tennessee Frequently Asked Questions

Tennessee Retainage FAQs

Retainage is limited to not more than 5% on all projects.

Retainage must be released to the original contractor within 90 days from substantial completion.  Funds withheld by the original contractor must be released to subcontractors within 10 days of the date on which the funds withheld from the original contractor are released to it.

Withheld retainage must be kept in an interest bearing, escrow account. If the owner or prime contractor withholds retainage that is for the use and benefit of the prime contractor or its subcontractor, neither the prime contractor nor any of its subcontractors will be required to deposit additional retained funds into an escrow account. Securities may be substituted for retainage.

Not specified in statute.

Not specified in statute.