# Retainage

*Also called: retention, holdback.*

**Definition.** Retainage is a percentage of each payment — commonly 5–10% — withheld until the job is complete and accepted, held as security that the contractor will return to finish the last items.

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](https://quotrium.com/glossary/punch-list)
- [Lump-sum bid](https://quotrium.com/glossary/lump-sum)
- [Change order](https://quotrium.com/glossary/change-order)

---

Source: https://quotrium.com/glossary/retainage · Quotrium — Comparable quotes for property work