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Can a General Contractor withhold Retention from subcontractors when the Owner/Prime Contract does not withhold?

CaliforniaRetainage

Our prime contract with the Owner of a private project does not hold retention. As the General Contractor, we desire to withhold 10% retention from our Subcontractors to provide security in case of any potential mechanics lien or shoddy contractor performance. Is that legal?

1 reply

Dec 20, 2021

Look at Business and Professions Code Section 7108.5. Unless otherwise agreed to in writing you have to pay your subcontractors no later than 7 days after receipt of progress payment. If you fail to do so the subcontractor can demand 2% interest per month until paid. If the matter is litigated the prevailing party is entitled to attorney's fees.

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