Bill > SB61

This bill addresses retention payments in private construction contracts by establishing new limits and requirements for withholding funds at different stages of a construction project. Starting January 1, 2026, the bill will restrict retention payments (funds temporarily withheld during construction to ensure project completion) to a maximum of 5% at each level of the contract, from the owner to the direct contractor, and between contractors and subcontractors. The total retention amount cannot exceed 5% of the total contract price. The bill includes two key exceptions: first, if a subcontractor fails to provide a performance and payment bond after being notified it will be required, the retention limit may not apply; second, the retention limits do not apply to residential projects of four stories or less that are not mixed-use. Additionally, the bill mandates that in any legal action to enforce these provisions, the court must award reasonable attorney's fees to the prevailing party. This legislation aims to provide more financial predictability and fairness in construction contracts by limiting the amount of money that can be held back during a project.

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https://leginfo.legislature.ca.gov/faces/billStatusClient.xhtml?bill_id=202520260SB61