Collecting Retention Monies in the Construction Industry

Andrew Hickman, Partner and Head of Construction at Else Solicitors, has offered some key advice in getting your Retention money back.

Retention is the proportion of money the client holds back in case they need to use it as a lever. This lever can then be used to persuade the main contractor to correct any defects that may become apparent once the contract has been signed off.

The problem arises when the client doesn’t pay the Retention money back. Sub-contractors themselves don’t even make it a priority.

Andrew said: “Many contractors, particularly sub-contractors, accumulate a lot of what can be seen to be relatively small Retention balances over the years. But in total these are significant.

“There never seems to be any progress in getting payment and it seems the time trying to get payment is disproportionate to the amount of any particular Retention sum.”

It can be difficult getting payment back as there is often no response from the client, or because the client states that the Final Certificate or the Certificate of Making Good Defects has not been issued.

If the release of the final part of Retention is linked to a Certificate under the main Contract, there appears to be no control or definitive date for release. This is because a Certificate may be being withheld due to works carried out by the main Contractor and/or other trades.

“Often, a main contractor will not say if the appropriate certificate has been issued and there appears to be no way of finding out because the ultimate client, or its employers agent and project manager, is not contractually required to tell a sub-contractor,” Andrew said.

“However, the Retention sums are debts and they most certainly are part of the profit on a job. There are legal arguments, which can be used to create pressure to help facilitate payment.”

Else Solicitors have expertise and a track record in recovering Retention money, even if the sum in question is several years old. Alongside this, Else can also assist with ensuring your system for collection of Retention is improved for the future.

To speak to a construction solicitor at Else, please contact 01283 526200.

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