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CaliforniaSB 612025-2026 Regular SessionSenateWALLET

Private works of improvement: retention payments.

Sponsored By: Dave Cortese (Democratic)

Signed by Governor

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Bill Overview

Analyzed Economic Effects

2 provisions identified: 1 benefits, 0 costs, 1 mixed.

5% cap on construction payment holdbacks

Starting January 1, 2026, for private construction contracts signed on or after that date, no more than 5% can be held back from any payment. Total retention across the job cannot exceed 5% of the contract price. A contractor cannot withhold a higher percentage from a subcontractor than the owner withholds from the direct contractor. These limits apply at every step of the payment chain.

Exceptions and legal fees for retention rules

Starting January 1, 2026, there are two carve-outs to the 5% cap. First, the cap does not apply if a contractor gave written notice before or at bid that performance and payment bonds are required, and the subcontractor fails to furnish a bond from an admitted surety insurer. Second, the cap does not apply to residential projects that are not mixed-use and have four stories or fewer. In lawsuits to enforce these rules, the court awards reasonable attorney’s fees to the party that wins.

Sponsors & Cosponsors

Sponsor

  • Dave Cortese

    Democratic • Senate

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 132 • No: 0

House vote • 6/23/2025

Item 18 — Assembly AFLOOR

Yes: 71 • No: 0

legislature vote • 6/17/2025

Vote in CX13

Yes: 11 • No: 0

Senate vote • 4/24/2025

Item 102 — Senate SFLOOR

Yes: 37 • No: 0

legislature vote • 4/8/2025

Vote in CS53

Yes: 13 • No: 0

Actions Timeline

  1. Chaptered by Secretary of State. Chapter 49, Statutes of 2025.

    7/14/2025Senate

  2. Approved by the Governor.

    7/14/2025legislature

  3. Enrolled and presented to the Governor at 11:15 a.m.

    7/3/2025legislature

  4. In Senate. Ordered to engrossing and enrolling.

    6/23/2025Senate

  5. Read third time. Passed. (Ayes 71. Noes 0. Page 2247.) Ordered to the Senate.

    6/23/2025House

  6. Read second time. Ordered to consent calendar.

    6/18/2025House

  7. From committee: Do pass. Ordered to consent calendar. (Ayes 11. Noes 0.) (June 17).

    6/17/2025House

  8. Referred to Com. on JUD.

    5/12/2025House

  9. In Assembly. Read first time. Held at Desk.

    4/24/2025House

  10. Read third time. Passed. (Ayes 37. Noes 0. Page 887.) Ordered to the Assembly.

    4/24/2025Senate

  11. Read second time. Ordered to consent calendar.

    4/10/2025Senate

  12. From committee: Do pass. Ordered to consent calendar. (Ayes 13. Noes 0. Page 705.) (April 8).

    4/9/2025Senate

  13. From committee with author's amendments. Read second time and amended. Re-referred to Com. on JUD.

    3/26/2025Senate

  14. Set for hearing April 8.

    3/26/2025Senate

  15. Referred to Com. on JUD.

    1/29/2025Senate

  16. From printer. May be acted upon on or after February 9.

    1/10/2025Senate

  17. Introduced. Read first time. To Com. on RLS. for assignment. To print.

    1/9/2025Senate

Bill Text

  • Chaptered

    7/14/2025

    HTML

  • Enrolled

    6/25/2025

    HTML

  • Amended Senate

    3/26/2025

    HTML

  • Introduced

    1/9/2025

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