Unpaid Retainage in Colorado: Rules, the 2026 Bond Law, and Your Options

The job is finished, the owner moved in, and the last slice of your contract, the retainage, still hasn’t been released. On a large commercial job, that can be the profit on the whole project.

Colorado has specific rules on how much retainage can be held on many private projects, and a 2026 law now lets contractors and subs replace retainage with a bond on new contracts. Here’s what the statutes say and what your options are.

Retainage of $10,000 or more still being held? Request a free claim review.

Colorado private-project retainage rules

Colorado’s construction retainage article covers contracts of $150,000 or more between an owner and a contractor, and the related subcontracts and supply agreements. It does not cover a single contract for one single-family home or a multifamily building of four units or fewer, or contracts with public entities (C.R.S. § 38-46-102).

• Retainage cap. Retainage withheld can’t be more than five percent of the price of the work completed (C.R.S. § 38-46-103).
• Conditional payment clauses still count. The article doesn’t override contract terms making payment conditional, such as pay-if-paid (C.R.S. § 38-46-103(2)(d)).
• Lien waivers. If the contract requires it, a lien waiver for the amount paid may be required (C.R.S. § 38-46-104).

New in 2026: retainage bonds (HB26-1311)

Colorado House Bill 26-1311 was signed on May 7, 2026, and takes effect August 12, 2026. It applies to contracts entered into on or after the effective date. According to the signed act:

• A contractor or subcontractor may tender a retainage bond, issued by an insurer licensed in Colorado, for up to five percent of the money earned. The owner, contractor, or subcontractor must then accept it and release the retainage.
• The party accepting the bond may require a minimum A.M. Best rating for the surety, but that minimum can’t be higher than “A-“. A contractor may withhold a sub’s share of the bond premium.
• The bond and its proceeds are subject to claims and liens in the same way as a mechanic’s lien.
• If an owner accepts a bond from the contractor, the contractor must accept a like bond from its subs.
• It does not apply to property owned by a public entity, including public-private partnerships.

If your contract was signed before August 12, 2026, the bond option likely doesn’t apply to it. Ask your attorney.

Public projects work differently

On Colorado public works contracts over $150,000, the public entity makes monthly partial payments of at least ninety-five percent of the value of completed work and keeps the withheld amount until final acceptance. Final settlement is due within 60 days after acceptance, and the contractor must pay subs within seven calendar days of receiving payment (C.R.S. § 24-91-103). Subs and suppliers can file a verified statement of claim before final settlement and must sue within 90 days after the final settlement date (C.R.S. § 38-26-107).

If retainage is being held too long

• Check your lien deadline. Retainage is part of what you’re owed. Colorado lien statements generally must be recorded within four months after last labor or materials (C.R.S. § 38-22-109). Waiting for retainage can blow that deadline.
• Ask for the reason in writing. Punch list, warranty, a dispute with another trade, or the owner not paying the GC.
• Look at the payment clause. See pay-if-paid clauses in Colorado.
• Contract claim. Colorado generally allows three years for contract actions (C.R.S. § 13-80-101).

How Darkwell helps

Legal costs are often what stops a good claim. Darkwell helps carry them. For held retainage, that can mean funding the lien and litigation work to get it released.

• We help carry the cost. Darkwell funding helps pay for the case, so your operating cash stays in your business.
• We bring attorneys we know. Darkwell has a network of attorneys we know. They help keep costs down while still pursuing the claim. The claim moves forward with an attorney from our network, or your current attorney where it fits.
• Your attorney handles the law. We don’t run your case or choose your legal strategy. Your attorney does that.
• You make a clear decision. The goal is to take the stress out of the fight and make the smart financial decision about your claim.

What to send for a claim review

• Your contract or subcontract and its retainage terms
• Pay applications showing retainage withheld
• Certificate of substantial completion or final acceptance, if any
• Correspondence about why retainage is being held
• Any lien, bond claim, or court filing so far

How we get paid

Our fee comes out of the recovery, not your pocket. If there’s no recovery, you don’t repay our funding. Your written agreement sets the exact terms.

Where we work and claim size

For business claims, we fund in many U.S. states, reviewed state by state, where champerty rules and litigation funding laws allow our model. We confirm your state during review. See where Darkwell funds claims.

We review claims of $10,000 or more, subject to review and approval by our team.

Darkwell does not buy or collect consumer debt in states that require a collection license, including Colorado.

Common questions

How much retainage can be held in Colorado? On covered private contracts of $150,000 or more, retainage can’t exceed five percent of the price of the work completed. Public projects follow a separate statute.

Can I use a retainage bond? Under HB26-1311, for covered contracts entered into on or after August 12, 2026, a contractor or sub may tender a retainage bond from a Colorado-licensed insurer. Public-entity projects are excluded.

Does the bond law apply to single-family homes? The retainage article excludes a single contract for one single-family home or a building of four units or fewer. Ask your attorney about your project.

Does Darkwell control the case? No. Your attorney handles the case and the legal strategy.

Sources

• C.R.S. § 38-46-102
• C.R.S. § 38-46-103
• C.R.S. § 38-46-104
• HB26-1311 bill page (Colorado General Assembly)
• HB26-1311 signed act
• C.R.S. § 24-91-103
• C.R.S. § 38-26-107
• C.R.S. § 38-22-109
• C.R.S. § 13-80-101

Retainage still held long after the job is done? Request a free claim review. Send what you have, and you’ll get a response from our team.

Related reading: Subcontractor Not Paid by the GC in Colorado · Colorado Construction Trust Fund Statute · Colorado Mechanic’s Lien Guide · Pay-If-Paid Clauses in Colorado · Subcontractor vs. General Contractor Claims · Colorado Litigation Funding