Although retention money is not common in residential building contracts (mostly because the law makes you give the client an automatic seven year warranty on the building works), here are some tips if the clients insists:
- Make sure that the retention percentage is not more than 5% of the contract price; and
- 50% of the retention amount should be payable to you upon practical completion, and the other 50% should be payable to you at the end of the defects liability period (which should be 13-26 weeks); and
- There is always the option of having in place ‘bank security’ rather than cash retention.