HB518 Summary

• Amends Alabama Code Section 8-29-3 to define retainage in construction contracts and establish requirements for retainage payments across owner-contractor-subcontractor chains.

• Increases maximum retainage percentage from 5% to 10% of estimated work value, with no further retainage withheld after 50% project completion.

• Requires owners to release and pay retainage to contractors within 60 days after contractor's work completion or substantial project completion (whichever occurs first), with all certificates of occupancy issued.

• Imposes 1% monthly interest (12% annually) on retainage amounts withheld in excess of permitted limits and on any retainage not paid on time.

• Applies only to construction contracts entered into on or after the effective date; becomes effective the first day of the third month following passage and Governor approval.