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Retentions in sub-contracts

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PGM retentions in contracts

It is not uncommon for roofing companies working as sub-contractors to the main contractor to have problems obtaining the release of retention money from that main contractor.

The retention amount should be specified within the sub-contract document and is usually set at three per cent or five per cent of the total work value.

Common practice is for the sub-contract to provide for half of the retention amount to be paid on what is called ‘practical completion’. The sub-contractor then enters the defect liability period during which they are obligated to address any faults or defects concerning the sub-contract works. Once this period ends and there are no defects present, the second half of the retention amount should be released.

If defects exist, the sub-contractor should make good those defects that are its responsibility under their sub-contract and a certificate of making good defects will be issued and the balance of the retention released.

Main contractors have been known to delay the release of retention on the basis that practical completion occurs on the completion of the main project and not the sub-contract works. Such a procedure is in contravention of the Construction Act, which no longer allows the release of retention monies to be linked to certification or completion of works under the main contract or any other contract up the line.

If you need advice on your position in relation to a retention or would like to instigate formal proceedings to recover the retention amount, please contact PGM solicitors on 01792 468684.

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