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According to Michigan law, who owns the interest earned on retainage, contractor/owner?

MichiganRetainage

Hi, I am a graduate student at MSU. Writing a paper on "Who owns the interest on retainage" Contractor/Owner? Could anyone please guide me to specific rules Michigan law have about interest earned on retainage. Thank you

20 replies

Apr 7, 2020
Good Morning, On public projects, in Michigan, the Contractor has a right to the interest on retainage. Michigan has a statute that governs retention on public construction projects. See, PA 524 of 1980 (MCL 125.1561) - http://legislature.mi.gov/doc.aspx?mcl-Act-524-of-1980 On private projects, the right to interest on retention would be a function of the terms and conditions of the underlying agreement between the parties. The agreement either provides or doesn't provide for retention and interest on retention. In my experience, very few private contracts address interest on retention.
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In Michigan, the rules regarding interest earned on retainage may be outlined in the state's construction lien act or other relevant statutes and regulations. It may also be helpful to look at case law to see how courts have interpreted these rules in practice and also check recent report there for your academic task. To get started with your research, you could try searching for relevant Michigan laws and regulations online or consulting legal databases such as LexisNexis or Westlaw. Additionally, you may want to reach out to legal professionals who specialize in construction law in Michigan, such as attorneys or law firms, to see if they can provide more specific guidance or resources. 

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 Except as provided in section 4(7) and (8), retainage and interest earned on retainage shall be released together with the final progress payment. 

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