5% Retention, Effective for all contracts entered into on or after January 1, 2012, California Public Contract Code section 7201 requires that the retention proceeds withheld from any payment by a public entity to the original contractor shall not exceed 5% of the total contract price. However, the retention amount may exceed 5% if the governing board has made a finding, prior to the bid, that the project is “substantially complex” and therefore requires a higher retention amount and the governing board includes both this finding and the actual retention amount in the Notice Inviting Bids.
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