Colorado Bill HB26-1311: Surety Bond for Construction Retainage

Detected March 19th, 2026

Summary

Colorado bill HB26-1311 proposes to allow contractors to submit a surety bond in lieu of retainage in construction contracts. This change would apply to contracts of $150,000 or more, altering current retainage withholding limits.

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What changed

Colorado bill HB26-1311, introduced for the 2026 Regular Session, proposes to amend existing law regarding retainage in construction contracts. Currently, property owners are prohibited from retaining more than 5% of a contract value if the contract is at least $150,000. The bill introduces the option for a contractor to provide a surety bond as an alternative to withholding retainage, which property owners would be required to accept if the bond meets specified standards. This provision extends to subcontractors requiring bonds from their contractors.

The practical implication of this bill, if passed, is that contractors may have more flexibility in managing cash flow by utilizing surety bonds instead of having retainage withheld. Regulated entities, specifically construction firms and property owners in Colorado, should monitor the progress of HB26-1311 through the legislative process. If enacted, compliance officers will need to ensure their contract terms and retainage practices align with the new provisions, including understanding the standards for acceptable surety bonds.

What to do next

Monitor the legislative status of Colorado Bill HB26-1311.
Review contract terms and retainage practices for compliance if the bill is enacted.
Understand the standards for surety bonds in lieu of retainage if the bill becomes law.

Source document (simplified)

HB26-1311

Retainage Surety Bond Construction Contracts

| Type | Bill |
| --- | --- |
| Session | 2026 Regular Session |
| Subjects | Housing Labor & Employment Professions & Occupations |
Concerning the use of a bond in lieu of retainage in construction contracts.

Recent Bill (PDF) Recent Fiscal Note (PDF) Bill Summary:

Under current law, a property owner is prohibited from retaining more than 5% of a construction contract as retainage if the contract is at least $150,000. The bill authorizes a contractor to submit a surety bond in lieu of withholding retainage, and the property owner must accept the bond and not withhold the retainage if the bond meets the bill's standards. A subcontractor may require the contractor to submit a bond in lieu of retainage for the subcontractor's portion of the retainage. The contractor may require the subcontractor to submit a like bond to the contractor. (Note: This summary applies to this bill as introduced.)