Can a GC hold retention from one job location for another location of work performed?

1 year ago

retention of approx., $3000 is bening held in lieu of another location completed

Disclaimer: The information presented here is not legal advice and should not be construed as such. Rather, this content is provided for informational purposes. Do not act on this information as if it is advice. Further, this post does not create any attorney-client relationship. If you do need legal advice, seek the help of a local attorney.
Senior Legal Associate Levelset
347 reviews

I’m sorry to hear you’ve had trouble getting your hands on retainage – retention practices in the construction industry can be abusive, at times. While retention can feel like a lawless game, California is pretty strict about how retainage payments are handled – and retainage from one location cannot be used as ransom to complete another project. In fact, in California, retainage amounts that aren’t directly related to some good faith dispute can’t be withheld on the same job – much less when there’s no good reason for withholding retention on some other job.

Keep in mind though – if retainage practices have been set out in the contract for work, or if the prime contractor hasn’t been paid themselves – retainage might not yet be due. But, where retainage is being improperly withheld, interest penalties and further liability could come into play. So, threatening to make a claim for retainage could be an effective tool for recovering retainage payments.

Further, keep in mind that whenever payment is owed but not actually made for construction work performed, those amounts will generally give rise to mechanics lien rights. And, by threatening to utilize a mechanics lien, many prospective claimants find that they can grease the wheels toward payment. At the same time – trying to talk out the issue before resorting to a mechanics lien threat or an actual lien filing is almost always a preferable option, and sending a document like a Notice of Intent to Lien or proceeding with a mechanics lien filing could impact relationships.

For more information on California’s retainage laws, these resources will be valuable: (1) California Retainage Overview; and (2) California Retainage Laws Make More Sense After Supreme Court Ruling.

For more information on California mechanics lien rights, this should be helpful: California Lien & Notice Overview.

Disclaimer: The information presented here is not legal advice and should not be construed as such. Rather, this content is provided for informational purposes. Do not act on this information as if it is advice. Further, this post does not create any attorney-client relationship. If you do need legal advice, seek the help of a local attorney.
Your answer or comment:
Are you a Registered Expert?
You are not logged in and will be posting
anonymously. Log in Now
Get answers from construction attorneys and payment experts
120 Character Limit