Retention in construction subcontracts: what to check
Five points every subcontractor should check so as not to lose money that is owed, from the contract to the payment certificates.
On most construction projects the main contractor withholds a percentage of every payment to the subcontractor as security for proper performance of the works. This sum, the retention, is released later on the terms of the contract. In practice, retention is one of the amounts most often left unpaid.
1. Percentage and cap
Make sure the contract states the retention percentage in writing and, if there is one, the maximum total amount. What was agreed orally is much harder to prove.
2. When it is released
The contract should say when retention is returned: on completion of the subcontractor's works, on completion of the whole project, or after the defects liability period ends. If release is in stages, note the dates.
3. Payment certificates
Every payment certificate should show the cumulative amount retained so far. Check it against your own records at every payment, not only at the end of the project.
4. One-sided changes
The contract binds both parties. If the main contractor changes the retention percentage or unit rates on its own in a later certificate, reply promptly in writing that you do not agree, so that you are not taken to have accepted the change.
5. Records and acting in time
Keep copies of the contract, all certificates, invoices and bank transfers. Contract claims are subject to limitation, generally six years, and the longer a claim waits, the harder it is to prove.
If retention is owed to you, a well-documented letter before action is often enough to get payment moving.
This text provides general information under Cyprus law as at the date of publication and is not legal advice. Contact us about your own situation.