Contracts & ExecutionQuestion 167 of 1632
A contractor completes $80,000 of work in a billing period. The contract provides for 5% retention. How much should the contractor expect to receive for this progress payment?
a.$80,000
b.$4,000
c.$84,000
d.$76,000
Explanation
Retention = 5% x $80,000 = $4,000, so the current payment is $80,000 - $4,000 = $76,000 (d); the $4,000 is paid later when retention is released. Civil Code §8811 caps private-works retention at 5% for contracts entered into on or after January 1, 2026. (a) $80,000 forgets the retention entirely. (b) $4,000 reports the amount withheld rather than the amount paid. (c) $84,000 adds the retention instead of subtracting it.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)