Money withheld from each payment to the contractor as a guarantee that they will finish the work correctly.
Retainage is a percentage of each progress payment that the owner withholds from the contractor until the project reaches substantial or final completion, typically 5 to 10%. It protects the owner by providing financial incentive for the contractor to complete the work and correct deficiencies. Retainage release is often tied to the completion of the punch list.
The owner held 10% retainage on all monthly pay applications, releasing $280,000 in retained funds when the punch list was complete.
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