North Carolina

Retainage

Public works. North Carolina limits retainage on public construction contracts to 5 percent of each periodic payment. Once the contractor has completed 50 percent of the work and the work is satisfactory and on schedule, no further retainage may be withheld, and the statute sets conditions for releasing retainage to early-finishing subcontractors after their work is complete and accepted. The same limits generally flow down from the prime contractor to subcontractors.

Private works. North Carolina does not set a general percentage cap on retainage for private construction, but its subcontractor payment statute provides that the retainage a contractor withholds from a subcontractor may not exceed the percentage the owner withholds from the contractor.

Prompt payment

Subcontractor payments, all projects. North Carolina's subcontractor payment statute applies to construction generally. A contractor must pay its subcontractors within 7 days of receiving payment from the owner for their work, and subcontractors must pass payment down on the same schedule. Late payments accrue interest at 1 percent per month. Withholding is allowed for defined reasons with notice. The statute addresses payments down the chain; it does not set a general owner-to-contractor deadline for private projects, which is left to the contract.

Public works. The public construction statute requires public owners to pay periodic payments as the contract provides and requires prime contractors to pay subcontractors within 7 days of receiving payment, with interest for late payment.

Official sources

• North Carolina General Assembly (see General Statutes section 143-134.1, public construction; and Chapter 22C, subcontractor payments)