Recovery Of A Retention By Sub-Contractors

The construction industry has been hard hit over recent years and one area in which we continually see problems arise is in respect of the release of a retention to a sub-contractor for works they have completed.

Retention payments in the construction sector

In terms of construction projects, it is perfectly usual and common for the works to be conducted under an overarching construction contract, with specific areas of work outsourced to sub-contractors. The sub-contractor is not responsible for the completion of the entire project but for a specific part of such.

However, that smaller part, of course, has to be completed to an adequate standard as it will impact other parts of the project. It is therefore integral for the main contractors to ensure every aspect of a sub-contractor’s work is fit for purpose before they pay for those works in full. The way that this is dealt with ordinarily is for a ‘retention’ amount to be defined in the sub-contract, allowing that percentage of the cost of the works to be ‘held back’ for a specified period.

The works will then be subject to review, to ensure the works meet the standards. Once the defined period of the retention has passed, and subject to there being no issue with the works undertaken by the sub-contractor, the retention should then be released to the sub-contractor.

Withheld retention payments – how we can help

Unfortunately and all too often, those retentions are not released without a fight.

At Nelsons, our Dispute Resolution team are specialists at recovering withheld retention monies owed under a sub-contract agreement. We have the expertise to review and consider the content of your sub-contract agreement and ascertain the basis of the retention and the ‘liability period’ after the completion of works within which the contractors are entitled to withhold payment. If there is no reason for the retention being retained, we can assist in its recovery without further delay.

Furthermore, if a main contractor is refusing to repay a retention on what they allege to be defective works or a breach of the sub-contract agreement, we are able to provide tailored advice on how such matters might be rectified or to resolve the repayment with the main contractor.

With retention sums ordinarily amounting to at least 5% of the total owed under a sub-contract, it is important that you seek repayment of unfairly retained retentions.