Guides

North Carolina prompt payment and retainage for subcontractors

Updated October 29, 2026.

General information, not legal advice. Laws change and your contract matters. Check the linked statutes and talk to an attorney about your situation.

This guide covers commercial subcontractors in North Carolina. It explains when you must be paid and how much retainage can be held, on public and private jobs. Every rule below links to the statute on the North Carolina General Assembly's website. Your contract can add terms, so read both.

Which law applies?

• Public jobs let by the State or a city, county or other political subdivision are covered by G.S. 143-134.1. It doesn't apply to Department of Transportation contracts let under G.S. 136-28.1.
• Private jobs are covered by Chapter 22C. Chapter 22C doesn't apply to residential contractors or to residential projects of 12 or fewer units (G.S. 22C-6).

Public projects (G.S. 143-134.1)

When the GC must pay you

• Within seven days of receiving each periodic or final payment, the prime contractor must pay you for the work completed or service provided under your subcontract (G.S. 143-134.1(b)).
• If it pays late, interest runs from the eighth day at 1% per month or fraction of a month (G.S. 143-134.1(b)).
• The owner pays the balance due to the prime contractor in full within 45 days after the earliest of acceptance, the architect's or engineer's certification, or occupancy (G.S. 143-134.1(a)).

Retainage limits

• No retainage at all on public construction contracts where the total project cost is less than $150,000 (G.S. 143-134.1(b1)). Session Law 2026-9 raised this from $100,000; the act took effect when it became law on June 19, 2026 (S.L. 2026-9, s. 5.1(c) and s. 8.1). Many older articles still say $100,000.
• The owner may not retain more than 5% of any periodic payment to the prime contractor (G.S. 143-134.1(b1)).
• Your retainage can't be a higher percentage than the owner holds from the prime contractor (G.S. 143-134.1(b1)).
• When the project is 50% complete, the owner, with the surety's written consent, stops holding further retainage if the contractor's performance is satisfactory. The statute applies the same terms and conditions to subcontractors (G.S. 143-134.1(b1)).
• Early-finishing trades (structural steel, piling, caisson, demolition and others named in the bid documents) that are 100% complete by the 50% mark have their retainage reduced to 0.5% of the contract (G.S. 143-134.1(b2)).
• Federal contract or grant requirements can override these retainage rules, and the bid documents must say when they do (G.S. 143-134.1(b6)).

When retainage comes back

Within 60 days after a pay request is submitted and either the owner receives a certificate of substantial completion or the owner gets beneficial occupancy or use (whichever the contract specifies), the retainage must be released (G.S. 143-134.1(b1)).

Private projects (Chapter 22C)

• Pay-if-paid clauses don't work. Payment by the owner to the contractor is not a condition precedent for payment to a subcontractor, and an agreement to the contrary is unenforceable (G.S. 22C-2).
• Seven days. The contractor (or a subcontractor paying a lower tier) must pay within seven days of receiving each periodic or final payment (G.S. 22C-3).
• Interest. Late payments carry interest from the eighth day at 1% per month or fraction of a month (G.S. 22C-5).
• Retainage. There's no fixed percentage, but retainage held from you can't exceed the initial percentage the owner retained (G.S. 22C-4).
• Withholding. The law lists the reasons a payer can withhold, such as unsatisfactory progress, defective work not fixed, disputed work and third-party claims (G.S. 22C-4).
• Owner to GC. Chapter 22C sets no deadline for the owner's payment to the GC; that's up to the contract.

What to do with this

• Ask whether a job is public or private and what retainage the owner holds from the GC. You need both to know which limits apply.
• On public jobs, note the total project cost. Under $150,000, no retainage should be held.
• Keep dated records of when your GC was paid and when you were paid, so you can work out interest.

Sources

• N.C. Gen. Stat. § 143-134.1 (ncleg.gov)
• N.C. Session Law 2026-9 (ncleg.gov)
• N.C. Gen. Stat. Chapter 22C (ncleg.gov)