Retention money is a significant source of disputes in the construction industry. Contractors often withhold retention long after the defect period has expired, leaving subcontractors and suppliers out of pocket. Here's a step-by-step guide to recovering your retention money.
Step 1: Know Your Contract
Review your contract carefully to understand the retention terms. How much retention is being held (typically 3-5%)? When is the first half due (usually at practical completion)? When is the second half due (at the end of the defects liability period)? What are the specific dates and conditions for release?
Step 2: Confirm Practical Completion
Ensure you have clear evidence that practical completion has been achieved. This might be a practical completion certificate, a written confirmation from the contractor, or evidence that the building is in use. Without evidence of practical completion, the contractor may claim the retention isn't yet due.
Step 3: Track the Defects Period
Mark the end of the defects liability period in your calendar. This is typically 6 or 12 months after practical completion. Well before this date, check whether any defects have been notified to you. If no defects have been raised, the retention should be released promptly after the period expires.
Step 4: Issue a Formal Request
When the retention becomes due, issue a formal written request for payment. Include references to the contract clauses, the practical completion date, and the expiry of the defects period. Give a clear deadline for payment (typically 7-14 days).
Step 5: Challenge Unjustified Withholding
If the contractor raises alleged defects to justify withholding retention, assess whether these defects are genuine, whether they fall within your scope of work, and whether they were notified within the defects period. Contractors cannot invent new defects after the period has expired to avoid releasing retention.
Step 6: Consider Adjudication
If the contractor refuses to release retention without good reason, adjudication may be the most effective route. The Construction Act gives you a statutory right to adjudicate construction disputes, including retention disputes. Adjudication is fast, relatively inexpensive, and the decision is binding unless overturned by court proceedings.
Step 7: Involve Specialists
Retention recovery can be complex, especially when dealing with large main contractors who are experienced at delaying payment. At Hays Collections, our retention recovery specialists understand the legal framework, the contractual issues, and the practical steps needed to recover your money. We act quickly and decisively to get your retention released.
Don't let retention money slip away. Contact Hays Collections for expert retention recovery support.
