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Aaron A. Dean and Curtis D. Smith, attorneys with our construction law and litigation team, whose legal careers span all facets of the construction industry, successfully lobbied on behalf of the Minnesota Subcontractors Association (MSA) for “retainage” reform in the 2016 Minnesota Legislative Session. The 2016 retainage law was passed and signed into law by Governor Dayton and will go into effect on August 1, 2016. The new law will apply to construction contracts entered into on and after that date.

Aaron and Curt helped draft the new legislation and negotiated the new law with other trade associations over a several year period. Aaron testified at the State Capitol in support of the new law. Although the new law is set to take effect August 1, 2016, the MSA and other construction industry participants have agreed to discuss additional changes to the new law, so the retainage law may change again in 2017.

The new law limits retainage to 5% of the contract value, rather than the commonly used prior practice of retaining 10%. The new law invalidates inconsistent contract provisions. Additionally, the new law allows contractors to stop work if they have not been paid the undisputed amount for more than ten days after payment is due and to recover legal fees, costs, and 18% interest.

Aaron just completed his two-year term as President of the MSA, and Curt serves as the MSA’s Chapter Attorney. Founded in 1991, the MSA is a non-profit trade association representing construction industry specialty contractors and suppliers. Members include both union and non-union firms from every specialty construction trade. MSA provides representation in government affairs, education services, scholarships, and cooperative action to improve the construction industry.