Also called: retention, holdback.
It is standard on commercial work and negotiable on residential. Many state statutes cap the percentage and set a deadline for release; some require the withheld money to be held in a separate account.
Retainage is the mechanism that makes a punch list enforceable. Without it, the final visit competes with the contractor's next paying job and loses.
It cuts both ways: retainage held unreasonably or released late is a real hardship for a small contractor, and it is a common reason good ones decline to bid.
Why it matters
Retainage decides whether the last 5% of the work happens. Whatever the number is, agree it — and the conditions for releasing it — before signing, not at the walkthrough.
Related terms
- Punch list — A punch list is the itemised list of incomplete or defective work identified near the end of a job, which the contractor must finish before the work is accepted and final payment released.
- Lump-sum bid — A lump-sum bid is a single fixed price for the entire defined scope, regardless of what the work actually costs the contractor to perform. The contractor carries the risk of their own estimate being wrong.
- Change order — A change order is a written amendment to a signed contract that adds, removes or alters work, and adjusts the price and schedule accordingly. It is the mechanism by which a job's final cost stops matching the bid you accepted.
Quotrium drafts the scope, sends it to the contractors you pick, and scores every bid against it line by line. See how it works.