Every private construction project in Illinois will be affected
by a new law, effective immediately. The Contractor Prompt Payment
Act (815 ILCS 603/1, et seq.) was amended to restrict the use of
retainage on construction projects. Specifically, no construction
contract may withhold more than 10 percent in retainage prior to 50
percent completion of the contract. When a construction contract is
50 percent complete, retainage must be reduced to no more than 5
percent and remain at no more than 5 percent until the contract is
completed. This new amendment will apply to all construction
contracts, i.e., those between an owner and a contractor and those
between a contractor and subcontractors.
