On a project with a $250,000 contract, the owner withholds 5% retention from each progress payment. After $150,000 of work has been billed and approved, how much retention has been withheld so far?
Explanation
Retention accrues on the work billed to date, not on the contract total: 5% x $150,000 = $7,500 (c). Civil Code §8811 caps private-works retention at 5% for contracts entered into on or after January 1, 2026, and Public Contract Code §7201 has capped most public works at the same figure for years. (b) $12,500 applies the correct 5% to the wrong base, the full $250,000 contract, which is what will have been withheld only once everything is billed. (d) $15,000 is 10% of the billed amount — the superseded private-works custom. (a) $750 slips a decimal.
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