The private construction game has very recently changed in Massachusetts. Late last year, the new Massachusetts Retainage law took effect. The new law applies to certain private construction contracts executed after November 6, 2014, and impacts not just the amount of retainage that a construction stakeholder may withhold, but also mandates some very specific processes related to project completion.

A few critical aspects of the new retainage law include:

  • The act applies to private projects with a contract value of $3 million or more (with a notable exception for smaller residential projects).
  • There is a new, statutory process for substantial completion, which carries with it the risk of an automatic or deemed approval of a Notice of Substantial Completion submitted by either a general contractor or a subcontractor.
  • There is also a statutory scheme for payment of retainage, which may cause owners and contractors to feel a cash flow squeeze during the retainage payout process.

It will be some time before construction stakeholders know the full impact of the new law. For more in-depth analysis, read our Construction Group’s legal update “The Massachusetts Retainage Act: A Breakdown.” We will monitor developments and keep you updated on the new law’s impact on Massachusetts private construction.