45-1204. Withholdings; authorized.
When work has been performed pursuant to a contract, an owner, a contractor, or a subcontractor may only withhold payment:
(1) For retainage, in an amount not to exceed the amount specified in the applicable contract, which shall not exceed a rate of ten percent. If the scope of work for the contractor or subcontractor from which retainage is withheld is fifty percent complete and if the contractor or subcontractor has performed work in accordance with the provisions in the applicable contract, no more than five percent of any additional progress payment may be withheld as retainage if the contractor or subcontractor provides or has provided satisfactory and reasonable assurances of continued performance and financial responsibility to complete the work;
(2) Of a reasonable amount, to the extent that such withholding is allowed in the contract, for any of the following reasons:
(a) Reasonable evidence showing that the contractual completion date will not be met due to unsatisfactory job progress;
(b) Third-party claims filed or reasonable evidence that such a claim will be filed with respect to work under the contract; or
(c) Failure of the contractor to make timely payments for labor, equipment, subcontractors, or materials; or
(3) After substantial completion, in an amount not to exceed one hundred twenty-five percent of the estimated cost to complete the work remaining on the contract.
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