Does Texas require 10 percent retainage on private construction?

Texas Property Code section 53.101 requires an owner to reserve 10 percent of the contract price or value of the work during covered work and for 30 days after completion for the benefit of lien claimants. This statutory reserve is not necessarily the same as the negotiated retainage shown on each pay application.

What are the Texas public-works retainage caps?

Under Texas Government Code section 2252.032, covered public works contracts below $5 million generally have a 10 percent maximum; contracts of $5 million or more generally have a 5 percent maximum. Dam projects and listed governmental entities have special rules and exceptions.

Is this Texas retainage guide legal advice?

No. It is editorial research based on public sources, has not been reviewed by a lawyer, and cannot determine rights or deadlines for a project or dispute.

TexasPublic informationNot legal advice

Texas Retainage Laws for Construction

Q: Does a Texas retainage claim have notice deadlines?

Yes. Texas Property Code section 53.057 contains a specialized notice process and short deadlines for certain derivative claimants seeking unpaid contractual retainage. Other lien requirements also apply. Obtain legal advice immediately rather than calculating a deadline from this summary.

Texas requires careful separation of a private owner’s statutory 10% reserve for lien claimants, contractual retainage between project participants, public-works percentage caps, and federal contract requirements.

Research status: Last researched September 1, 2026 from the public sources linked below. Prepared by the PayAppPro editorial team. This page has not been reviewed or approved by a lawyer. Review schedule: quarterly and after relevant Texas legislative changes.

Important legal-information disclaimer

This is a general summary of publicly available law, not legal advice or a legal opinion. PayAppPro is not a law firm. We have not reviewed your contract, notices, lien filings, payment bond, project ownership, funding source, completion facts, or claim.

Texas lien and bond deadlines can be short and fact-specific. Never calculate or delay a notice, lien, bond, or lawsuit deadline based on this page. Verify the current statutes and contact qualified Texas construction counsel promptly.

Texas retainage at a glance

Project category	Public-information summary	Start with
Private project eligible for mechanics’ liens	Owner generally must reserve 10% of the contract price or value of work during progress and for 30 days after completion. This reserve protects eligible lien claimants and is not automatically the same as contractual retainage.	Property Code §§ 53.101–53.105
Texas public work below $5 million	Covered governmental entity generally may not exceed 10% of contract price or an SOV item.	Government Code § 2252.032
Texas public work of $5 million or more	Covered governmental entity generally may not exceed 5% of contract price or an SOV item.	Government Code § 2252.032
Public dam project	The statute specifies a 10% maximum regardless of contract value.	Government Code § 2252.032(b)(3)
Direct federal contract	Federal clauses govern; FAR 52.232-5 permits up to 10% when satisfactory progress has not been achieved.	Contract and FAR 52.232-5

This table omits details and exceptions. In particular, § 2252.032(i) identifies governmental entities for which special rules apply.

Private projects: statutory reserve is not just a billing percentage

Texas Property Code § 53.101 says that, during work under an original contract for which a mechanics’ lien may be claimed and for 30 days after completion, the owner must reserve either 10% of the contract price or 10% of the value of the work under the statutory measure.

The statute now calls these “funds required to be reserved.” Their purpose is to secure payment for qualifying people furnishing labor or material. This legal reserve should not be described casually as a universal command that every pay application show exactly 10% contractual retainage. The contract’s retainage provision and the owner’s statutory-reserve obligation are related but distinct concepts.

Why notices matter

Property Code § 53.057 contains a special notice for certain claimants seeking unpaid contractual retainage. The current text requires the notice by the earlier of specified 30-day events involving completion, termination, or abandonment. That is only one part of Texas lien compliance; the lien affidavit and other notices have their own requirements.

Do not use this paragraph as a deadline calculator. Party status, contract dates, completion, termination, residential status, and other facts can change what is required. Missing a Texas notice or filing deadline can affect rights.

Texas state and local public works

Texas Government Code § 2252.032 requires covered public contracts to address substantial completion and potential release of retainage. Its principal percentage limits are:

Below $5 million: generally no more than 10% of contract price or an item in the bid schedule/SOV.
$5 million or more: generally no more than 5%.
Dam construction or maintenance: generally no more than 10%, regardless of value.

The prime generally may not withhold a greater percentage from a subcontractor than the governmental entity may withhold from the prime; the same concept flows to lower tiers. The statute also restricts retainage after completion and during warranty periods, addresses early release, interest-bearing accounts in specified situations, and contains exceptions in subsection (i).

Public-project payment-bond claims are governed separately by Texas Government Code Chapter 2253. A private mechanics’ lien framework should not be applied to public property.

Federal and federally assisted projects

For a direct federal fixed-price construction contract, FAR 52.232-5(e) provides for full payment when satisfactory progress is achieved and allows the contracting officer to retain up to 10% when satisfactory progress has not been made. FAR 32.103 says withholding should be case-specific and not a substitute for contract management.

Federally assisted Texas transportation and DBE projects may include additional prompt-payment and retainage clauses. Identify the funding source and read the prime contract and mandatory flow-downs.

What billing teams should verify

Private ownership, Texas governmental entity, direct federal, or federally assisted status
Total public contract value and whether the work is a dam project
Any § 2252.032(i) exception
Contractual retainage versus the private owner’s statutory reserve
Completion, termination, abandonment, and receipt dates
Notice, lien, or bond-claim requirements identified by counsel
Prime and lower-tier retainage percentages and release provisions

PayAppPro can track retained amounts in a billing workflow. It cannot decide whether reserved funds are legally sufficient, preserve a lien or bond claim, send statutory notices, or determine a deadline.

Official sources

Source review date: September 1, 2026. Texas’s official site states its statutes are current through the 89th Legislature’s 2025 called sessions. Verify again before use.

Frequently asked questions

Is Texas’s 10% private reserve the same as pay-app retainage?

Not necessarily. Section 53.101 protects lien claimants through an owner reserve. The parties may also have contractual retainage provisions that must be read separately.

What is the public-works cap?

Generally 10% below $5 million and 5% at $5 million or more, with dam-project and subsection (i) rules requiring attention.

Can PayAppPro preserve a Texas lien or bond claim?

No. Get legal advice promptly about notices and filings.

Has a Texas lawyer reviewed this page?

No. It is based on linked public sources and is not legal advice.

Related retainage resources

Retainage Laws by State · California · Texas · Florida · Michigan · New York · Retainage billing calculations