Guides

Retainage rules in South Carolina: limits, release and worked examples

Updated November 3, 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 page covers retainage only for South Carolina subcontractors: how much can be held on private, state and local government jobs, and when state-job retainage must come back. It works through examples with real numbers. For payment deadlines and the interest notice too, see the full South Carolina prompt payment and retainage guide.

Every rule below links to the South Carolina Code on the South Carolina Legislature's website. The examples are our own arithmetic, applying the statute as written. Your contract can add terms, so read both.

The short version

• Private jobs (S.C. Code § 29-6-40): "a reasonable amount for retainage", with no percentage set. Your contract sets the rate.
• State jobs (S.C. Code § 11-35-3030(4)): no more than 3.5% of each progress payment, in prime contracts and subcontracts, and your share is released by division, within ten days of the prime contractor receiving it.
• Counties, cities and school districts: the 3.5% rule is in the State's procurement code, which excludes local political subdivisions (S.C. Code § 11-35-310(18)). Check the local procurement code and your contract.

Private projects: Title 29, Chapter 6

• Law (SC): nothing in the chapter prevents an owner, contractor or subcontractor from withholding payment for listed reasons, including "a reasonable amount for retainage" (S.C. Code § 29-6-40). The chapter sets no percentage and no release date.
• Law (SC): the chapter doesn't apply to residential homebuilders, residential projects of sixteen or fewer units, or private owners whose improvements aren't financed by a nonowner (S.C. Code § 29-6-60).

Example. Your subcontract on a bank-financed warehouse says 10% retainage. Your pay app shows $25,000 of work this period. The chapter sets no cap, so the contract's 10% applies: $2,500 held, $22,500 due.

State construction: § 11-35-3030(4)

• Law (SC state jobs): in a contract or subcontract for construction with progress payments based on an estimated percentage of completion, "the retained amount of each progress payment or installment must be no more than three and one-half percent" (S.C. Code § 11-35-3030(4)(a)).

Example. On a state agency's construction project, your pay app shows $50,000 of work this period. The most that can be retained is $50,000 × 3.5% = $1,750, so at least $48,250 is due. If your subcontract says 10% ($5,000), the statute caps it at 3.5%.

Release by division

• Law (SC state jobs): when work is done by multiple prime contractors, or a prime and multiple subcontractors, "the work contracted to be done by each individual contractor or subcontractor is considered a separate division of the contract for the purpose of retention". As each division is certified complete, its retained funds "must be released forthwith to the prime contractor, who, within ten days of its receipt, shall release to the subcontractor responsible for the completed work the full amount of retention previously withheld from him" (S.C. Code § 11-35-3030(4)(b)).

Example. Your division of a state project is certified complete, and the prime contractor receives your $12,600 share of the retained funds on March 3. It must release the full $12,600 to you within ten days of receipt, so by March 13.

• Practice: ask the GC when your division is certified complete, and keep a dated record of when the prime received the retained funds.

Local government jobs

• Law (SC): "governmental body" in the Consolidated Procurement Code "excludes ... all local political subdivisions such as counties, municipalities, school districts, or public service or special purpose districts" (S.C. Code § 11-35-310(18)).
• So on a county, city or school-district job, the 3.5% limit in § 11-35-3030(4) may not apply. Read the bid documents, the local procurement code and your subcontract.

What to do with this

• Ask whether the job is private, state or local before assuming a percentage.
• On state jobs, check every pay app for retainage above 3.5%.
• Track retainage on every pay app. The retainage calculator and tracker keeps a running total you can download as a CSV.
• North Carolina job? See retainage rules in North Carolina.

Related tools and guides

• Late payment interest calculator (NC and SC): the 1%-a-month interest the prompt-payment statutes allow, worked out from your dates.
• Retainage calculator and tracker: retainage held and amount due on one pay app, and a running total across a job.
• How to bill a general contractor: the monthly pay-app cycle from schedule of values to final payment.

Sources

• S.C. Code Title 29, Chapter 6 (scstatehouse.gov)
• S.C. Code Title 11, Chapter 35 (scstatehouse.gov)