371.410 Retainage that may be withheld -- Release of retainage -- Substantial
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/ky/371-410A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
completion.
(1)Notwithstanding any provision of the Kentucky Revised Statutes to the contrary,
until fifty percent (50%) of the construction project has been completed in
accordance with the contract, a contracting entity, contractor, or subcontractor may
withhold no more than ten percent (10%) retainage from the amount of any
undisputed payment due, and retainage held after fifty-one percent (51%) of the
construction project has been completed shall not be more than five percent (5%) of
the total contract amount.
(2)Within thirty
(30)days after substantial completion of a construction project, the
contracting entity or contractor shall release the retainage less an amount equal to
two hundred percent (200%) of the contracting entity's reasonably estimated cost of
the balance of any contractor's or subcontractor's contractually obligated, yet
uncompleted, work remaining. The contracting entity's agent shall determine the
reasonably estimated cost due under this subsection. The contracting entity,
contractor, and any subcontractor with work yet to be completed shall mutually
agree with the schedule for completion of the work necessary for release of final
payment. Within fifteen
(15)business days after the retainage has been released by
the contracting entity to the contractor, the contractor shall release to the
subcontractors their proportional shares of the retainage. For purposes of this
subsection, "substantial completion" is the point at which, as certified in writing by
the contracting entity, a project is at the level of completion, in strict compliance
with the contract, where:
(a)Necessary approval by public regulatory authorities has been given;
(b)The owner has received all required warranties and documentation; and
(c)The owner may enjoy beneficial use or occupancy and may use, operate, and
maintain the project in all respects, for its intended purpose.
Partial use or occupancy shall not necessarily result in the project being deemed
substantially complete and shall not be evidence of substantial completion.
(3)If a contracting entity, contractor, or subcontractor fails to pay retainage, if any,
pursuant to the terms of a contract or as required in this section, the contracting
entity, contractor, or subcontractor shall pay interest to the contractor or
subcontractor to whom payment was due, beginning on the first business day after
the payment was due, at the rate of twelve percent (12%) per annum.