Retention

Retention is the last tranche of a project’s payment schedule, at least 10% of the price, held back until the work is fully approved, no defects stand open from the handover check, and the site is cleared. It is agreed in the written assignment before work starts. Withholding money that was due at handover is a dispute; releasing an agreed retention on sign-off is the contract working.

The mechanism sits in how jobs are priced. The advance and the progress tranches cover the contractor’s costs roughly as they land, so the final tranche is where the margin sits. A snag list standing between a contractor and their margin is a snag list that gets closed; the same list, presented after full payment, is a favour you are asking. Keep the retention large enough to be worth enforcing. A token holdback gets waved through.

The floor holds for a project you asked for and accepted, not a day’s work or a single repair. It never rises above what the market’s law lets you withhold either: where a market’s statutory ceiling sits below 10%, that ceiling wins, and holding more is a position a contractor can take to court and win.

Three moments where confusing it costs money: a final invoice that arrives before the snag list is closed (the retention is the reason you can decline it calmly); a request to invoice the full sum before year-end while defects stand open (the books-closing pressure is your leverage, not theirs); an inspection finding that surfaces after full payment (the correction is now goodwill, not obligation).

Sibling frame: deposit, money ahead of the work, capped at 30% and tied to materials; retention is money behind the work. Distinct from warranty: retention covers the state of the work at handover, the warranty covers what fails after it.