Contracts & ExecutionQuestion 878 of 1605
A 'retention' (retainage) provision in a construction contract generally allows the owner to:
a.Keep the contractor's tools permanently
b.Charge the contractor extra fees
c.Withhold a specified percentage of each progress payment until the work is satisfactorily completed
d.Avoid paying for any completed work
Explanation
A retention or retainage clause lets the owner withhold an agreed percentage (commonly around 5-10%) from each progress payment as security, releasing it after the work is satisfactorily completed or accepted. It incentivizes the contractor to finish properly and correct defects. It does not let the owner seize the contractor's tools, escape paying for completed work altogether, or impose extra fees; the withheld retention is eventually paid when conditions are met.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)