What is Colorado HB21-1167 and What Does It Mean?

During the Colorado legislature’s 2021 Regular Session, a bill was introduced “Concerning retainage in construction contracts governing improvements to private real property.” Until now, Colorado law allowed property owners to withhold up to 10 percent of the price of completed work to ensure that the work was satisfactorily completed. HB21-1167 prohibits property owners from withholding more than five percent of the price of completed work on projects. Additionally, the bill states that the prohibitions outlined in the bill do not apply to other types of contractual conditions made before payment is due. This means that contracts may require lien waivers to be executed before payments are made.

Other conditions of the bill include minimum contracts of at least $150K, as well as a subcontract or supply agreement with that contract. It does not apply to the construction of single-family dwellings, multifamily dwellings with four or less units, or contracts with public entities.

The law officially took effect at 12:01 a.m. on September 7, 2021, 90 days after the final adjournment of the Colorado General Assembly.

Learn more about HB21-1167 on the Colorado General Assembly website, and what the new law means for general contractors and subcontractors on the Colorado Construction Litigation blog.

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