MD HB954

Undisputed retention proceeds held by state units or contractors on State procurement contracts must be paid within 90 days after the date of substantial completion

Retainage on State construction contracts is capped at 5% of the total amount when contractors have furnished 100% payment and performance security

Contractors cannot retain a higher percentage of payments from subcontractors than the State retains from them, and the same rule applies to subcontractors with lower-tier subcontractors

Retainage may be deposited in interest-bearing escrow accounts, and payments must include a pro rata portion of interest earned

Effective date: October 1, 2026