Private works of improvement: retention payments.
- Limits retention payments on private construction contracts to 5% of payment value starting January 2026.
- Exempts residential projects under four stories and non-mixed-use buildings from retention payment limits.
- Requires courts to award attorney fees to prevailing parties in retention payment disputes.
- Allows higher retention if subcontractors fail to provide required performance and payment bonds.
Senator Cortese's private works improvement legislation establishes a 5% cap on retention payments that owners, contractors, and subcontractors can withhold from construction project payments in California. The measure, which takes effect for contracts initiated after January 1, 2026, limits total retention proceeds to 5% of the contract price and requires subcontractor retention rates to align with those specified in owner-contractor agreements.
The legislation creates two notable exemptions to these retention limits. Contractors and subcontractors may exceed the 5% threshold when subcontractors fail to provide requested performance and payment bonds from admitted surety insurers. The caps also do not apply to residential projects that are four stories or fewer and not mixed-use developments.
To facilitate enforcement, the measure authorizes courts to award reasonable attorney's fees to prevailing parties in disputes over retention payment requirements. This provision applies to all actions brought to ensure compliance with the new retention payment standards.
 Dave CorteseD Senator | Bill Author |  Not Contacted |
Email the authors or create an email template to send to all relevant legislators.
Introduced By
Latest Voting History
| Ayes | Noes | NVR | Total | Result |
|---|---|---|---|---|
| 71 | 0 | 8 | 79 | PASS |
- Limits retention payments on private construction contracts to 5% of payment value starting January 2026.
- Exempts residential projects under four stories and non-mixed-use buildings from retention payment limits.
- Requires courts to award attorney fees to prevailing parties in retention payment disputes.
- Allows higher retention if subcontractors fail to provide required performance and payment bonds.
Email the authors or create an email template to send to all relevant legislators.
Introduced By
Senator Cortese's private works improvement legislation establishes a 5% cap on retention payments that owners, contractors, and subcontractors can withhold from construction project payments in California. The measure, which takes effect for contracts initiated after January 1, 2026, limits total retention proceeds to 5% of the contract price and requires subcontractor retention rates to align with those specified in owner-contractor agreements.
The legislation creates two notable exemptions to these retention limits. Contractors and subcontractors may exceed the 5% threshold when subcontractors fail to provide requested performance and payment bonds from admitted surety insurers. The caps also do not apply to residential projects that are four stories or fewer and not mixed-use developments.
To facilitate enforcement, the measure authorizes courts to award reasonable attorney's fees to prevailing parties in disputes over retention payment requirements. This provision applies to all actions brought to ensure compliance with the new retention payment standards.
Latest Voting History
| Ayes | Noes | NVR | Total | Result |
|---|---|---|---|---|
| 71 | 0 | 8 | 79 | PASS |
Dave CorteseD Senator | Bill Author | Not Contacted |