On a private works contract entered into on or after January 1, 2026, how much retention may be withheld from each payment?

Explanation

Civil Code §8811, added by SB 61 and operative for contracts entered into on or after January 1, 2026, caps retention on a private work of improvement at 5 percent — of each payment and of the contract price — at every tier: owner to direct contractor, direct contractor to subcontractor, and below (b). The two exceptions behind the word 'narrow' are a residential project that is not mixed use and does not exceed four stories, and a subcontractor that fails to furnish a performance and payment bond from an admitted surety after written notice given at or before bid time. The prevailing party in an action to enforce the section recovers attorney's fees. (a) states the law as it stood before 2026, when private retention really was a pure matter of contract. (c) is the 10 percent custom the statute was passed to end; it now survives only inside those two exceptions and on contracts signed before 2026. (d) has the right figure but the wrong scope — Public Contract Code §7201 has capped most state and local public works at 5 percent for years, and §8811 extends the same ceiling to private work.