When is retainage typically paid?

Retainage is a portion of the payment withheld until the completion of a construction project to ensure that contractors and subcontractors fulfill their contractual obligations. It is typically a percentage of the total payment that remains unpaid until all project work is completed to the satisfaction of the owner or the contracting party.

This practice provides financial leverage to the project owner, encouraging timely completion and addressing any potential defects or issues that may arise during the final stages of work. The final payment, which includes the retainage, is often disbursed once the owner has inspected and confirmed that all contractual requirements have been met.

Progress payments may be made throughout the project, but retainage is specifically withheld until the project reaches completion, which helps ensure that all work is executed correctly and satisfactorily before releasing the remaining funds.