Illinois Enacts State Contract Retainage Law

Illinois recently joined a string of states around the United States to enact a law that alters the rules for drafting construction contracts. Governor Jay Robert Pritzker signed Public Act 101-0432 into law, which limits the amount of permissible retainage clients can withhold from payments to contractors on construction projects.

The new law applies to any privately funded project in the state except for residential construction that contains 12 or fewer units in one building.

The law is aimed at getting contractors and subcontractors payments for projects earlier in the project’s timeline. Clients cannot withhold more than 10% on projects. Additionally, the law sets a maximum of 5% when the contractor has completed 50% of the project’s contract.