Guides

South 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 South Carolina. It explains when you must be paid, how to protect your right to interest, and how much retainage can be held. Every rule below links to the South Carolina Code on the South Carolina Legislature's website. Your contract can add terms, so read both.

The Prompt Payment Act (Title 29, Chapter 6)

The Act covers private owners and government owners: "owner" includes state, local and municipal government agencies (S.C. Code § 29-6-10). It doesn't cover residential homebuilders, residential projects of 16 or fewer units, or private owners whose improvements aren't financed by someone other than the owner (S.C. Code § 29-6-60).

Payment deadlines

• The owner pays the contractor the undisputed amount of a pay request within 21 days of receiving it (S.C. Code § 29-6-30).
• The contractor pays its subcontractors what it received for their work and materials within seven days of receiving each periodic or final payment, and the same applies down the tiers (S.C. Code § 29-6-30).
• The Act doesn't require more frequent payments than your construction documents set (S.C. Code § 29-6-40).

Interest needs notice on the pay request

Late payments carry interest at 1% per month (or a pro rata fraction), but no interest is due unless the payer was notified of section 29-6-50 when payment was requested (S.C. Code § 29-6-50). The statute doesn't prescribe wording. A plain line on every pay application is one way to give notice, for example:

This payment request is made subject to the South Carolina Prompt Payment Act, S.C. Code Ann. § 29-6-50, which provides for interest on late payments.

On private projects only, the parties can waive sections 29-6-30 and 29-6-50, but only by naming them by section number in conspicuous bold-faced or underlined type (S.C. Code § 29-6-50). Look for that in your subcontract.

Pay-if-paid clauses

A subcontractor that performs is entitled to payment from the party it contracted with; payment by the owner is not a condition precedent, and agreements to the contrary are not enforceable (S.C. Code § 29-6-230).

Retainage

• Private jobs: the Act allows "a reasonable amount for retainage" and sets no percentage (S.C. Code § 29-6-40). Your contract sets the rate.
• State jobs: on state construction, the retained amount of each progress payment is no more than 3.5%, in the prime contract and in subcontracts (S.C. Code § 11-35-3030(4)).
• Released by division: on state jobs, each subcontractor's work is a separate division for retainage. Once that division is complete, its retainage goes to the prime contractor, which must release it to you within 10 days of receiving it (S.C. Code § 11-35-3030(4)).
• Local government jobs: the Consolidated Procurement Code's definition of "governmental body" excludes counties, municipalities and school districts (S.C. Code § 11-35-310), so the 3.5% cap may not apply. Check the local procurement code and your contract.

What to do with this

• Put the § 29-6-50 notice on every South Carolina pay application.
• Ask whether a public job is a state contract or a local one before assuming the 3.5% cap.
• Keep dated records of every pay request and payment.

Sources

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