Tennessee Project Management, Liens & Retainage
Tennessee's lien statute and retainage-escrow rule protect payment, and scheduling keeps the job on track. This chapter covers the prime contractor's lien, the retainage cap, and float.
The mechanics' and materialmen's lien
Tennessee lien law is in T.C.A. §66-11. A prime contractor who contracts directly with the owner has a lien that continues for one year after the work is completed or abandoned, and suit to enforce it must be filed within that year. Missing the one-year deadline extinguishes the lien, leaving only ordinary contract remedies.
Retainage capped at 5% and held in escrow
Under T.C.A. §66-34-104, retainage withheld from progress payments is capped at 5% of each payment, and the retained funds must be deposited into a separate, interest-bearing escrow account. The cap and escrow requirement protect cash flow, and improper withholding exposes the withholding party to penalties.
Critical path and float
The critical path is the longest chain of dependent activities and has zero float, so any slip on it delays completion. A shorter parallel chain carries float equal to the difference between the paths: if the critical chain is 15 days and a parallel chain is 10 days, that chain has 5 days of float before it would delay the job.