Overview of Washington Retainage Claims

By statute, public owners of projects are allowed to withhold up to five percent (5%) of the contractor's earnings to be held in trust for the payment of state and local tax obligations and the potential claims of unpaid subcontractors, suppliers, and other providing services to the public works project. RCW 60.28.011(1)(a).

In lieu of having a portion of its earnings withheld, a prime contractor may post a bond benefiting the public owner. RCW 60.28.011(6).

The procedures for filing a retainage claim, and the content of the notice of claim on retainage are similar to that of public works bonds. RCW 60.28.011(2). However, the deadlines for retainage are different from that of claims on public works bonds.

Any person making a claim on the retainage must do so within 45 days of the completion of the public works project. RCW 60.28.011(2).

Completion of a project does not necessarily mean that the public body has formally accepted the project with final acceptance – the starting point for the deadline of public works bond claims. Rather, with public contracts over $35,000, completion is initiated by the public owner notifying the department of revenue, the employment security department, and the department of labor and industries of the completion. RCW 60.28.051.  

A timely notice of claim on the retainage must be given to the public owner by either personal delivery or via certified mail and must include specific information such as names, amounts, and a description of the work performed. RCW 60.28.011(2); RCW 39.08.030.

Once the notice is given, the claimant must file suit against the public owner as custodian of the retainage within four months of completion; otherwise the retainage lien will lapse. RCW 60.28.030.

Although an action to foreclose on the retainage is technically a lawsuit against the public entity, the public entity is not required to formally defend, but instead must certify certain information to the superior court such as the date of project completion, the existence of other claims, and the extent of any tax obligations arising from the public works project. RCW 60.28.051.

When the retainage is disbursed, taxes which have been certified as due or to become due are given priority over other retainage claimants. RCW 60.28.021.

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