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How does retainage work when both the owner and GC charge retainage?

I'm an owner on a project. We have a contract with 5% retainage with our GC. The GC in turn has 10% retainage with their subs. The sub submits to the GC for $100 for completed and stored work, and $90 for the current payment due. GC pays the $90, then sub has to invoice for $10 at end of the project Should the GC submit to us (as the owner) completed and stored work of $100 or $90? We then subtract our retainage from that amount for the current payment due.

2 replies

Mar 4, 2022

I think that the GC is holding too much retainage. I would be pushing the GC to release half that retainage at the 50% point and drop the retainage to 5% at that point. just my suggestion. you will get an invoice of $100 from the sub and you will pay $95. hopefully, the GC will pay the sub at 90% of hte total billed, not the amount paid.

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Mar 4, 2022

Thank you for your response. The GC isn't going to change their retainage with their subs. So in this case they are paying the sub $90. GC then submits to us (owner) for $100, which we pay $95 to the GC after the retainage. Resulting in owner paying more to GC than GC is paying to sub. I wanted to clarify if GC should be submitting to us the $90 they actually pay to sub now, or the $100. That we're paying GC more than they are paying the sub defeats us having retainage with the GC.

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