Tennessee § 66-34-303 - Withholding of payment or retainage by prime contractor.

§ 66-34-303. Withholding of payment or retainage by prime contractor.

This chapter does not prevent the prime contractor from reasonably withholding payment or a portion of payment to the remote contractor, as long as the withheld payment is in accordance with the written contract between the prime contractor and the remote contractor. The prime contractor may also withhold a reasonable amount of retainage as specified in the written contract between the prime contractor and remote contractor; except, that the retainage amount must not exceed five percent (5%) of the amount of the contract. Acts 1991, ch. 45, § 1; 2007, ch. 201, § 6; 2020, ch. 749, § 25. Compiler's Notes. Acts 2007, ch. 201, § 7 provided that the act, which added the proviso at the end of the last sentence, shall apply to all construction contracts to which the act applies entered into on or after July 1, 2007. Acts 2020, ch. 749, § 42 provided that the act, which amended this section, applies to actions occurring and contracts entered into, amended, or renewed on or after July 1, 2020. Amendments. The 2020 amendment substituted “prime contractor” for “contractor” four times; in the first sentence, substituted “This chapter does not” for “Nothing in this chapter shall”, “remote contractor, as long as the” for “subcontractor, materialman or furnisher; provided, that such”, and “remote contractor.” for “subcontractor, materialman or furnisher.”; and in the second sentence, substituted “and remote contractor; except,” for “, subcontractor, materialman or furnisher; provided, however,”. Effective Dates. Acts 2020, ch. 749, § 42. July 1, 2020.