New Jersey

Retainage

Public and private works. New Jersey does not set a single statewide percentage cap on retainage across all construction. Public contracting statutes for particular kinds of public bodies include retainage provisions and release requirements, and private retainage is set by contract. The Prompt Payment Act, described below, does address the timing of retainage payments once they become due.

Prompt payment

New Jersey's Prompt Payment Act applies to contracts for improvements to real property, public and private, with some exclusions. Under the Act:

• When a billing has been approved and certified by the owner, the owner must pay the prime contractor the amount due for each periodic payment, final payment or retainage within 30 calendar days of the billing date. A billing is deemed approved and certified 20 days after receipt unless the owner gives a written statement of the amount withheld and the reason.
• A prime contractor must pay its subcontractors and suppliers within 10 calendar days of receiving each periodic payment, final payment or retainage payment, and the same requirement flows down the chain.
• Late payments accrue interest at the prime rate plus 1 percent.
• A party that is not paid as the Act requires may, after written notice, suspend performance without penalty, and the prevailing party in an action to collect is entitled to reasonable costs and attorney fees.

The Act allows withholding for amounts in good-faith dispute where notice is given.

Official sources

• New Jersey Legislature (see New Jersey Statutes Title 2A, Chapter 30A, Prompt Payment)