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House limits construction retention to 5% in contractor-protection bill
Summary
House Bill 382, limiting contract retention to 5% and requiring interest-bearing holding of retention funds for contractors, passed the House after proponents spoke about protecting subcontractors’ cash flow; the bill passed unanimously on the floor.
House Bill 382, presented on the third-reading calendar, would cap retention that owners can withhold on construction contracts at 5% and require that retained sums be held in an interest-bearing account for the contractor’s benefit.
Representative Cohen, the floor sponsor, said the change protects subcontractors and prevents retention practices that cut into slim profit margins. “Limiting retention in no way infringes on the right of the owner to withhold the necessary amount for any breach of contract or for failure to complete the work,” Cohen said, and described that retention above 5% can impair contractors’ ability to bid on future work.
Several members, including Representative Hickman, declared support; Representatives Short and Gordon Snow declared potential conflicts of interest (one as a subcontractor, one as a licensed general contractor) but nonetheless supported the bill. Representative Cohen waived summation and the bill was passed by the House with the Clerk recording 62 yes votes and 0 no votes; it will be sent to the Senate.
Supporters framed the bill as a fairness measure for the construction industry; no on-floor amendments were recorded during final passage.
