A contractor completes a $180,000 contract billed with 5% retention. Two-thirds of the way through he has billed $120,000. How much retention is being held at that point?
Explanation
Retention held to date = 5% of the amount billed to date = 5% x $120,000 = $6,000 (d); it accrues on each progress billing until released at completion. Civil Code §8811 caps private-works retention at 5% for contracts entered into on or after January 1, 2026. (a) $9,000 applies the correct 5% to the full $180,000 contract instead of the $120,000 billed. (c) $12,000 is 10% of the billed amount, the pre-2026 private-works custom. (b) $114,000 is the amount paid out, not the amount held.
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