Retention Payments: What Can You Do When It Isn't Released?

Retention is a familiar feature of many construction contracts. A percentage of the money due is withheld until an agreed stage of the project, often to provide protection if defects need to be corrected.

However, even when the work is complete, obtaining the retained money is not always straightforward. For contractors and subcontractors, this can restrict working capital long after the main project has finished.

Why do retentions remain unpaid?

Common reasons include:

• Disagreement over whether the work is complete

• Alleged defects that have not been clearly identified

• Confusion about contractual release dates

• Missing certificates or project documents

• Delays elsewhere in the contractual chain

• The paying party simply failing to deal with the account

  
  

The first step is to establish why payment has not been released.

Review the contract, confirm the relevant release dates and check whether all required work and documentation have been completed. Payment applications, certificates, emails, site records and photographs may help support your position.

Is it overdue or disputed?

If the paying party accepts that the retention is due but continues to delay, conventional debt recovery may be appropriate.

If payment is being withheld because of a disagreement over defects, valuations, completion or contractual terms, it may amount to a construction dispute. In suitable circumstances, adjudication could be a more appropriate route.

Repeated reminders are unlikely to resolve a genuine dispute. Equally, vague references to “outstanding issues” should not delay payment indefinitely without a proper explanation.

Taking the next step

If a retention remains unpaid:

• Request a clear written explanation

• Ask for details of any alleged defects

• Gather the relevant project records

• Set a reasonable deadline for a response

• Consider professional assistance if no progress is made

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Westbury Collections assists contractors, subcontractors and construction professionals with unpaid and disputed accounts. We can review the documentation and help identify whether negotiation, debt recovery or adjudication may be the most commercially appropriate option.

If an outstanding retention is affecting your business, contact Westbury Collections to discuss the options available.