Texas Retainage Law: The 10% Reserved Fund GCs Must Hold

If you run payments for a general contractor on Texas private work, Texas retainage law is quietly deciding how much cash sits frozen on every job and who can reach into it if a bill goes unpaid. Texas is unusual: the state does not just let you negotiate a retention percentage in your contract — it forces a 10% reserve by statute and hands every downstream claimant a direct lien on that pot. Get the mechanics wrong and you can pay your subs in full, release your own retention, and still get hit with a lien against money you already spent. This guide breaks down the statutory reserved fund, the confusing "reserved funds" rename, the 30-day deadline that burns GCs, and how to keep your waivers on the same rail as the money.

SureHold is not a law firm and this post is not legal advice. Retainage and lien deadlines are strict and fact-specific — verify any figure or date against the statute and your own counsel before you rely on it.

What Texas retainage law actually requires

Most contractors think of retainage as a number they negotiate — hold 5% or 10% off each pay app until the job closes out. That contractual retention exists in Texas, but it sits on top of a mandatory floor written into the statute.

Under Texas Property Code § 53.101, during the progress of work under an original contract and for 30 days after the work is completed, the owner must reserve 10 percent of the contract price (or 10 percent of the value of the work performed, whichever measure applies). This is not optional and it is not something the parties can waive away in the contract. The legislature created it as a guaranteed pool that unpaid subcontractors and suppliers can reach even if the owner has already paid the GC everything else.

That last point is what trips people up. The statutory reserve is a fund the owner is legally required to hold — but as the GC, you are almost always the one advising the owner on draws, certifying pay apps, and managing closeout. If the owner over-releases because your pay app told them to, and a sub goes unpaid, you are the one who has to explain it.

"Statutory retainage" vs. "reserved funds": the HB 2237 rename

If you have worked in Texas for more than a few years, you learned this fund under the name statutory retainage. That term is now outdated. When Texas overhauled its entire mechanic's lien chapter through HB 2237 — effective January 1, 2022, applying only to original contracts signed on or after that date — the legislature retired the phrase "statutory retainage" and replaced it with "reserved funds."

The rename was not cosmetic. It was meant to end years of confusion between two very different things that people kept calling "retainage":

	Statutory reserved fund	Contractual retainage
Where it comes from	Texas Property Code § 53.101 — required by law	The retention clause you negotiate in your contract
Amount	A fixed 10% the owner must reserve	Whatever percentage the parties agree to
Who it protects	Downstream lien claimants (subs, suppliers)	The paying party's performance security
Can you waive it?	No — it is a statutory obligation	Yes — it is a contract term

The practical takeaway: when a Texas lawyer or title company says "reserved funds," they mean the mandatory 10% statutory pool. When your project manager says "retainage," they usually mean the contractual withholding on the pay app. They are not the same money, and they do not release on the same schedule. If your accounting system lumps them together, you will eventually release one thinking it was the other.

The deadline that burns GCs: 30 days on the reserved funds

Here is where Texas retainage law gets sharp. A claimant does not automatically get paid out of the reserved fund. They have to perfect a lien against it — and the window is short.

Under Texas Property Code § 53.103, a claimant has a lien on the reserved funds only if they sent the notices the chapter requires and then filed a lien affidavit no later than the 30th day after the earliest of these events: the work under the original contract is completed, the contract is terminated, or the original contractor abandons the job.

Thirty days is fast. It runs from the original contract's completion, not from when a particular sub finished their scope. So a framing sub who wrapped up months earlier can still file against the reserved fund within 30 days of the whole project closing out. As the GC, that means the danger window opens the moment the job substantially completes — exactly when everyone is trying to release retention and move on.

HB 2237 also streamlined the broader notice framework. On commercial work, a downstream claimant now sends its monthly fund-trapping notice to the owner and the GC by the 15th day of the third month following each month it furnished labor or materials (the second month for residential), per the Allensworth summary of HB 2237. Those notices are what "trap" your payments to the GC and preserve the claimant's rights — so when you get one, treat it as a live signal that money downstream is at risk, not as junk mail.

What this means for your pay cycle

The failure mode is almost always the same. The job closes, everyone wants their money, retention gets released — and only afterward does a second-tier sub or supplier surface with an unpaid balance and a fresh lien affidavit against the reserved fund. Now the GC is caught between an owner who already released and a claimant with a valid statutory lien.

Three habits keep you clean:

Do not release retention until you have a signed unconditional waiver for the amount being released. A conditional waiver only takes effect once payment clears; an unconditional waiver signed before the check lands can leave you exposed. This is the same conditional-vs-unconditional trap covered in our guide to Texas lien waiver forms — Texas even prescribes the exact release language by statute.
Track the 30-day reserved-fund clock separately from your contractual retention schedule. They close on different triggers. Put the original-contract completion date on the calendar the day it happens.
Chase waivers from lower-tier parties, not just your direct subs. The claimant who liens the reserved fund is frequently a sub-sub or supplier you never contracted with. Collecting their waivers is document hygiene, not a courtesy.

How SureHold keeps retainage and waivers on one rail

Most GCs run retainage in a spreadsheet and waivers in an email thread, and the two never quite reconcile. That gap is where reserved-fund liens live.

SureHold is a self-serve, transparently priced platform that couples each payment to a signed waiver — the sub signs, the release is recorded, and the money moves together instead of drifting out of sync. Because the waiver and the payment sit on the same rail, you always know which releases are backed by a signed, dated waiver and which are still exposed. Model your current admin cost with our ROI calculator, read the state breakdown on our Texas lien waiver software page and the Texas lien waiver reference, and see how payment-coupled release works on our lien waiver escrow overview.

SureHold offers waiver templates for all 50 states, with California on the verified statutory form and other states on general templates under legal review — so treat the software as a workflow that keeps your timeline tight, and keep your Texas statutory release language confirmed with counsel.

Takeaway

Texas retainage law is two rules stacked on each other: a mandatory 10% reserved fund the owner must hold, and a fast 30-day window for claimants to lien it once the job completes. The 2022 rename to "reserved funds" was the legislature trying to stop contractors from confusing that statutory pool with ordinary contractual retention. Keep the two on separate calendars, never release retention ahead of a signed unconditional waiver, and the reserved fund goes back to being what it was meant to be — a safety net you control.