Cal. Civil Code - CIV § 8810. Section 8810.
This article governs a retention payment withheld by an owner from a direct contractor or by a direct contractor from a subcontractor.
ARTICLE 2. Retention Payment [8810. - 8822.]
Cal. Civil Code - CIV 2.
in effectCal. Civil Code - CIV § 8811. Section 8811.
(a)
This section is applicable to a contract relating to a private work of improvement entered into on or after January 1, 2026.
(b)
(1)
(A)
A retention payment withheld from a payment by an owner from the direct contractor, by the direct contractor from any subcontractor, and by a subcontractor from any subcontractor thereunder, for a private work of improvement, shall not exceed 5 percent of the payment.
(B)
In no event shall the total retention proceeds withheld exceed 5 percent of the contract price.
(C)
In a contract between the direct contractor and a subcontractor, and
in a contract between a subcontractor and any subcontractor thereunder, the percentage of the retention payment withheld shall not exceed the percentage specified in the contract between the owner and the direct contractor.
(2)
Paragraph (1) does not apply to a direct contractor or subcontractor if the direct contractor or subcontractor provides written notice to a subcontractor before, or at, the time that the bid is requested that a faithful performance and payment bond shall be required, and a subcontractor subsequently fails to furnish to the direct contractor or subcontractor a performance and payment bond issued by an admitted surety insurer.
(3)
Paragraph (1) does not apply to an owner, direct contractor, or subcontractor on a residential project if the project is not mixed-use and does not exceed four stories.
(c)
In any action to enforce the provisions of this section, a court shall award reasonable attorney’s fees to the prevailing party.
Cal. Civil Code - CIV § 8812. Section 8812.
(a)
If an owner withholds a retention from a direct contractor, the owner shall, within 45 days after completion of the work of improvement, pay the retention to the contractor.
(b)
If part of a work of improvement ultimately will become the property of a public entity, the owner may condition payment of a retention allocable to that part
on acceptance of the part by the public entity.
(c)
If there is a good faith dispute between the owner and direct contractor as to a retention payment due, the owner may withhold from final payment an amount not in excess of 150 percent of the disputed amount.
Cal. Civil Code - CIV § 8814. Section 8814.
(a)
If a direct contractor has withheld a retention from one or more subcontractors, the direct contractor shall, within 10 days after receiving all or part of a retention payment, pay to each subcontractor from whom retention has been withheld that subcontractor’s share of the payment.
(b)
If a retention received by the direct contractor
is specifically designated for a particular subcontractor, the direct contractor shall pay the retention payment to the designated subcontractor, if consistent with the terms of the subcontract.
(c)
If a good faith dispute exists between the direct contractor and a subcontractor, the direct contractor may withhold from the retention to the subcontractor an amount not in excess of 150 percent of the estimated value of the disputed amount.
Cal. Civil Code - CIV § 8816. Section 8816.
(a)
If the direct contractor gives the owner, or a subcontractor gives the direct contractor, notice that work in dispute has been completed in accordance with the contract, the owner or direct contractor shall within 10 days give notice advising the notifying party of the acceptance or rejection of the disputed work. Both notices shall comply with the requirements of Chapter 2 (commencing with Section
8100) of Title 1.
(b)
Within 10 days after acceptance of disputed work, the owner or direct contractor shall pay the portion of the retention relating to the disputed work.
Cal. Civil Code - CIV § 8818. Section 8818.
If an owner or direct contractor does not make a retention payment within the time required by this article:
(a)
The owner or direct contractor is liable to the person to which payment is owed for a penalty of 2 percent per month on the amount wrongfully withheld, in place of any interest otherwise due.
(b)
In an action for collection of the amount wrongfully withheld, the prevailing party is entitled to costs and reasonable attorney’s fees.
Cal. Civil Code - CIV § 8820. Section 8820.
It is against public policy to waive the provisions of this article by contract.
Cal. Civil Code - CIV § 8822. Section 8822.
This article does not apply to a retention payment withheld by a lender pursuant to a construction loan agreement.
Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026