What is Retainage?
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Have questions about retainage on your job, or retainage in general? This is a tricky area of law that can really impact your job, your cash, and/or your job risk. Learn everything you need to come out alive!
Map of Retainage Rules Nationwide
Retainage rules are different all across the country and the world. Use our color coded map to learn about the retainage requirements that may affect your next job.
Demand Your Retainage Payment
Too often, contractors wait a long, long, long time to get paid the retainage withheld on a job. Sometimes, you need to make a specific demand to get retainage. Let's help you with this!
Retainage, also called “retention,” is a term and practice commonly used in the construction industry, but not really anywhere else.
Retainage is a percentage of the amount due for the labor or materials furnished to a construction project that is withheld and not paid out until the final completion of the work. Withholding a percentage of the contract price is a mechanism designed to ensure that the project is completed properly and to protect a contracting party from the inability or unwillingness of a party below them on the payment chain to remedy defective work, discharge liens, or otherwise comply with contractual requirements.
Retainage, according to some property owner and GC publications “gets the job done.” And, used fairly, that is true. By having an amount withheld after it is “earned” there is a sufficient urgency created to make sure the work is done correctly and mistakes are fixed. And, to the extent, the work cannot be correctly accomplished or remedied, the money to fix it doesn’t have to be an “extra” spend.
Just like many other mechanisms related to construction payment, however, the retainage scheme can be abused. Accordingly, rules, requirements, and practices have been built into federal law and the laws of many states, with respect to retainage to promote its fair use and to prevent its abuse. The amount of the contract price that can be withheld and the time for which the retainage may be withheld vary by state (and federally), and be dependent on project type.