Legal Advisory: New Massachusetts Retainage Law for Private Construction Projects

NEW MASSACHUSETTS RETAINAGE LAW (M.G.L. c. 149, §29F)

TO GOVERN PRIVATE CONSTRUCTION PROJECTS

EFFECTIVE – NOVEMBER 6, 2014

Q. What private construction projects does the new Massachusetts Retainage Law affect?

A.  The law applies to all private construction projects in which the prime contract exceeds
$3 million (except those involving 1-4 unit residential projects).

Q. What are the main elements of the new Massachusetts Retainage Law?

A. The main elements include:

  • Limits retainage on periodic payments to no more than 5%
  • Requires Prime Contractor to submit notice of substantial completion to Owner within 14 days of substantial completion
  • Owner to accept or reject notice of substantial completion within 14 days of receipt of notice
  • Defines substantial completion as date the work is sufficiently complete so that Owner may occupy or utilize project for its intended use.
  • Requires party withholding retainage to first provide written notice describing incomplete or defective work and deliverables
  • Requires Owner to furnish Prime Contractor with written punch list, including deliverables, within 14 days after acceptance of notice of substantial completion
  • Requires Prime Contractor to furnish subcontractors with written punch list, including deliverables, within 21 days after Owner’s acceptance of notice of substantial completion
  • Requires good faith certifications to be made
  • Allows for electronic communications
  • Any contract provision that “purports to waive, limit or subvert” the Retainage Law or “redefine or expand the conditions for achievement of substantial completion for payment of retainage” will be void and unenforceable