Template · Retention release

Getting the retention back

The last three, five or ten per cent of a contract sum sits with somebody else until the defects period runs out, and then it sits there a while longer because nobody wrote the letter. Put in the contract sum, the percentage, the date of practical completion and the length of the defects period, and this page works out the money and the date and asks for it in writing.

1. Who

You are the party the money is owed to. They are the party holding it. Which of you is in business changes one paragraph at the end, so the page asks.

Which of you is which

Your name or company name Their name or company name Your address Their address Your email or phone, optional The project or property

Contract or job reference, optional

2. The money

Contract sum The final account figure if there is one, since that is what the percentage is normally taken on. Say which you have used in the letter if it is not obvious. Retention percentage Three and five per cent are the usual domestic figures. Take it from the contract, not from memory. Retention already released, optional Many contracts release half at practical completion. If yours did, put that here and the letter asks for the balance rather than the whole. Is the retention written into the contract?

3. The dates

Date of practical completion The date the works were certified or agreed as practically complete, not the day the last van left. Length of the defects period Date of this letter

4. Snagging Is the snagging list complete? What is still outstanding, and when you will do it

Payment within, days Payment details, optional

What retention is, and is not

Contract

The contract beats every general rule Retention is not created by any statute. It exists because a contract says money may be held, how much, and when it comes back. Five per cent, half at practical completion and half at the end of a twelve month defects period, is a common shape, not a legal default. Whatever your contract says about the percentage, the trigger and the timing displaces anything you read here, including this page.

Nothing?

If nothing was written down Money held back with no contractual right to hold it is not a retention: it is part of the price, unpaid. That is a stronger position, not a weaker one, and the letter says so rather than politely asking for a release that no term provides for.

Defects

What the defects period actually is A window in which the contractor comes back and makes good defects that appear, not a warranty period and not a probation. It ends on a date. Ending it does not end liability for defective work, which runs on under the ordinary law of contract for years afterwards.

s 106

No adjudication on a home Part II of the Housing Grants, Construction and Regeneration Act 1996, which gives the payment notice regime and the right to adjudicate at any time, does not apply to a construction contract with a residential occupier: section 106(1)(a), and section 106(2) for what that means. Northern Ireland has the same exclusion in article 5 of the Construction Contracts (Northern Ireland) Order 1997. On a domestic job the route is the contract and then the court.

Before you send it

Read the clause first. Everything on this page is arithmetic applied to what you type in. If the contract measures the defects period from a certificate of making good rather than from practical completion, or releases on a certificate rather than on a date, the date this page produces is the wrong one. The clause wins.
Two releases, not one. Most contracts that hold a retention release about half of it at practical completion and the rest at the end. If the first half was paid, put it in the box above and the letter asks for the balance instead of the lot, which is the difference between a reply and an argument. Three to five per cent of the contract sum is the usual figure.
Attach the arithmetic. Contract sum, percentage, what has already been released, and the balance. It is three lines and it removes the commonest stalling reply, which is that they will have to look into the figure.
Finish the list before you ask. A retention request with open snagging items invites the answer you do not want. If two items remain, do them, then write. If you cannot, the letter should say what remains and when it will be done, which is what this page produces when you say the list is open.
The defects period ending is not the end of their liability. Nor of yours. It ends the obligation to come back and make good under that clause. Defective work remains a breach of contract long afterwards, with the ordinary time limits running from when the cause of action accrued.
Keep it warm rather than legal on the first pass. Most retentions are not withheld, they are forgotten. A short letter with the figure, the date and the bank details releases more money than a threat does, and you can always send the second letter.
On a domestic job there is no adjudication. Part II of the Housing Grants, Construction and Regeneration Act 1996 is disapplied for a construction contract with a residential occupier by section 106, so the statutory payment notices and the right to adjudicate at any time are not available. That leaves the contract, then a claim in the county court, the sheriff court or the small claims court depending on the nation.

Retention is a matter of contract, so unlike the other templates in this section nothing about it changes at a border: the same clause means the same thing in Manchester, Cardiff, Glasgow and Belfast. What changes is the machinery around it. Part II of the Housing Grants, Construction and Regeneration Act 1996 extends to England, Wales and Scotland, with the Construction Contracts (Northern Ireland) Order 1997 doing the same job in Northern Ireland, and both exclude contracts with a residential occupier. Where both sides are in business, the Late Payment of Commercial Debts (Interest) Act 1998 applies across the United Kingdom, though the rate is set by separate orders for Great Britain and Northern Ireland. Court procedure and time limits differ in each nation.

These are starting points, not legal advice. This page has not read your contract, does not know whether practical completion was ever certified, and cannot tell whether the money being held is a retention at all or simply an unpaid balance with a label on it. Where the sum matters, take the contract and this letter to someone who can read the clause properly before the second letter goes out.

Getting the retention back

Templates are switched off at the moment

What retention is, and is not

Before you send it