DENVER, CO, June 03, 2026 /24-7PressRelease/ -- Denver construction litigation firm Volpe Law LLC is advising Colorado contractors, subcontractors, and property owners to understand a new state law that changes how retainage works on private construction projects. The firm's construction law attorneys report that the shift could have a meaningful impact on cash flow and risk allocation across the industry.

Governor Jared Polis signed House Bill 26-1311 into law on May 7, 2026. The law is expected to take effect on August 12, 2026, and will apply to contracts created on or after that date.

Under existing Colorado law, property owners, contractors, and subcontractors can withhold up to 5% of the price of completed work as retainage. That money sits untouched until the project is finished or specific conditions are met. For contractors and subcontractors carrying labor costs, material expenses, and overhead, that withheld 5% can create real financial strain, especially on large or long-duration projects.

Under the new law, a contractor or subcontractor may submit a retainage bond, issued by a licensed surety, in lieu of having retainage withheld. If the bond meets the statutory requirements, the property owner or contractor must accept it and release the retained funds. The bond amount cannot exceed 5% of the money earned by the party submitting it.

HB 26–1311 also establishes a flow-down mechanism. When a property owner accepts a retainage bond from a contractor, that contractor must accept a "like bond" from any subcontractor who submits one. This new law does not apply to contracts involving publicly owned property, including projects arising from public-private partnerships.

"Retainage has always been a point of tension on construction projects," said Ben Volpe, founding attorney at Volpe Law LLC. "The concept makes sense as a protection for owners, but it often ties up money that contractors and subs have already earned. This law offers them a way to keep that cash working, while still providing the owner with a guarantee that the work gets done right."

For contractors and subcontractors, the practical impact is significant. Starting in August, they can post a surety bond instead of leaving earned money in someone else's hands. But taking advantage of that option requires understanding the bond requirements, ensuring the surety qualifies, and knowing how the new rules interact with existing contract terms and payment structures. Property owners should take note as well. Under the new law, accepting a qualifying retainage bond is no longer optional.

Any contractors or owners with questions about how HB 26-1311 affects their projects can contact Volpe Law for a complimentary discovery call.

About the Firm:

Volpe Law LLC is a Denver-based litigation firm that represents business owners, contractors, property owners, developers, and investors across Colorado. The firm handles construction litigation, real estate disputes, commercial litigation, breach of contract claims, mechanic's lien actions, and fractional outside general counsel services. Founded by Ben Volpe, a Super Lawyers Rising Stars honoree three years running (2023-2025), the firm practices in all Colorado state district courts and the U.S. District Court for the District of Colorado.

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