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How can we get our retainage from General Contractor on Government funded HUD project

TexasRecovery Options Retainage

I have been working on a HUD project and I am 98% complete . The GC will not give me access to complete the remaining 5% for 3 more months. I have worked on the project for 8 months and they have been holding over 25k in retainage. . How can our company collect these funding? Should we contact HUD?

1 reply

May 23, 2019

I'm sorry to hear about that. Retainage can be a particularly unfair practice - and no business should have to wait until months after their work was performed in order to receive payment.

First, it's worth looking to the contract that was signed to determine whether the retainage being withheld is being done according to the agreement. If that contract doesn't provide for retainage, or if the agreement calls for an earlier release of retainage, then bringing that to the contractor's attention might be a good first step.

If retainage is being wrongfully withheld, and if a contractor refuses to release retainage anyway, then taking a little more drastic action might be appropriate. For one, threatening a lien claim or bond claim (as appropriate, depending on the project type), could help to speed things along. A Notice of Intent to Lien or Notice of Intent to Make a Bond Claim could help there. When a claimant shows their customer and/or the project owner that they're unafraid to do what it takes to get paid, including pursuing a lien claim or bond claim, it might be enough to get payment talks moving in the right direction. Further, threatening legal action (such as a breach of contract claim, a claim for retainage, or some other legal theory) might help with recovering retainage payments, and a payment demand letter sent via an attorney can be particularly effective.

But, if push comes to shove and retainage is going to be released too late, then moving forward with a claim - be that a lien claim, a bond claim, or even legal action - may become necessary. But again, before deciding on a course of action, it's important to look to the contract to determine what's an allowable timeframe for retainage, and reaching out to a local construction attorney for further guidance might be worthwhile.

For further discussion on retainage practices, these resources should be valuable: (1) Retainage Blueprint Page by Levelset; (2) The Ultimate Guide to Retainage.

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