On a $150,000 contract, the owner withholds 5% retention from each progress payment. After all work is billed, how much money is being held as retention?

Explanation

Retention = 5% x $150,000 = $7,500 (b), held by the owner until the project is accepted, which the contractor must plan for in its cash flow. Civil Code §8811 caps private-works retention at 5% for contracts entered into on or after January 1, 2026, and Public Contract Code §7201 sets the same ceiling on most public works. (c) $15,000 applies the 10% that was customary on private jobs before 2026. (d) $142,500 is the amount paid out, not the amount held. (a) $1,500 is 1%, a decimal slip.