Passing retainage through
Retainage is the money the owner holds back from each payment until later in the job. O.C.G.A. 13-11-6 says the contractor shall, within ten days from the contractor's receipt of retainage from the owner, pass through payments to subcontractors.
The trap: the retainage pass-through is 10 days, the same as the ordinary subcontractor payment in 13-11-4(b). The 15-day figure is the owner's deadline to pay a payment request under 13-11-4(a). A 30-day period is not in the retainage section. The 90-day figure is when a signed lien waiver becomes effective under 44-14-366(g)(2).
Reducing sub retainage
When the owner reduces the retainage it holds on the contractor, 13-11-6 requires the contractor to reduce each subcontractor's retainage in the same manner as the contractor's retainage is reduced by the owner.
- Holding full sub retainage to final completion ignores that duty.
- Releasing all sub retainage at once goes beyond the statute, which mirrors the owner's reduction.
- The duty comes from the statute itself, so it does not depend on separate subcontract language.
The three conditions
A subcontractor's retainage is reduced under 13-11-6 when all three are true:
- the sub's work in place equals 50% of the subcontract value;
- the work is proceeding satisfactorily; and
- the sub gives reasonable assurances, which may include bonds.
Common errors: a 75% threshold with a final lien waiver is not in 13-11-6; substantial completion of the whole project plus a certificate of occupancy is not the trigger; and 50% alone leaves out the satisfactory-progress and assurance conditions.
Computing the threshold
Threshold = 0.50 × subcontract value.
For a 240,000 dollar subcontract: 0.50 × 240,000 = 120,000 dollars of work in place. 60,000 dollars would be 25%, 180,000 dollars would be 75%, and 240,000 dollars would mean waiting until the sub's work is complete.