The builder won't release my retention. What can I do?
Start with the clause. Retention comes back when the contract's release trigger is met, usually half at practical completion and the balance at the end of the defects liability period. If the trigger has passed and any required paperwork is in, ask for it in writing, citing the clause and the date. If it still doesn't come, retention that is due under the contract is money owed like any other, and your state's Security of Payment process is the next step. In NSW, retention on larger projects must be held in trust; Queensland runs statutory trust arrangements on some projects, and a scheme is phasing in for WA.
Find the trigger, then check it has passed
Read the release clause for three things: what triggers release (your practical completion, or the head contract's), what paperwork has to be handed over first, and whether the defects period restarts on rectified work. Drafting tied to the head contract can hold your money months after your trade finished, and a restarting defects period can hold the final tranche well past the stated end date.
If the trigger has passed, write to the builder. Name the clause, the trigger date and the amount, and ask for payment by a stated date. It costs nothing, it puts the builder on notice, and it builds the paper trail you will need if it goes further.
If it still doesn't come
Retention that is due under the contract is part of what you are owed. Your state's Security of Payment Act gives you the payment claim process and fast adjudication to enforce amounts that are due, and Adjudicate Pro will assess your position for free: whether the amount is due, the builder's likely defence, and the next step under your state's Act.
Expect a deed of release to be put in front of you as the price of payment. Read it before you sign: a release of all claims to get your own retention back is a bad trade if you have open variations.
Where your retention sits
In NSW, retention money held from subcontractors on larger projects must be held in trust. Queensland runs statutory trust arrangements on some projects, and WA's 2021 Act phases in a retention trust scheme for contracts under the new regime. Elsewhere, until release, retention is generally an unsecured debt owed by the builder, which is why the release mechanics matter as much as the percentage.
Know where your contract stands
Adjudicate Pro: what an adjudicator would likely award under your state's Act, and whether to apply.
Assess my payment dispute freeCommon questions
How long can a builder hold retention?
As long as the contract allows and no longer. The market position is half at your practical completion and the balance at the end of your own defects liability period, with a fixed outside date. Clauses tied to the head contract or to a restarting defects period are what stretch it.
Can the builder keep my retention to cover back-charges?
Only if the contract gives it that right, usually through a recourse or set-off clause, and often only after notice. Ask for the amount and the reason in writing, and check the clause before you accept it.
What happens to my retention if the builder goes broke?
Unless it is held in trust, retention is generally an unsecured debt, so you would rank with other unsecured creditors. That is the strongest argument for bank guarantees instead of cash retention, and for chasing release the day it falls due.
Retention, by state
Terms in this guide
Keep reading
- How much retention is normal on an Australian subcontract? →
- What is a deed of release, and should I sign one to get paid? →
- What does the defects liability period actually oblige me to do? →
- Free wording: deed of release carve-out →
- Retention calculator: what's held, when it's released, what it costs →
General information for Australian subcontractors, not legal advice. Statutory deadlines and details vary by state and change over time; verify them before relying on them. Written by Mat Kennedy at The Construction Contracts Co.