Release of retention in construction: when should it be paid?

Reviewed 2026-10-07 · Official sources linked below · General information, not legal advice.

Find the trigger in the contract

Look for the retention percentage, the cap, the release events, the person who certifies them and any condition requiring a claim or invoice. ‘Practical completion’, ‘making good defects’ and ‘final certificate’ are not interchangeable. Copy the exact clause into your payment schedule.

A retention schedule

Contract sum and retention percentage or fixed amount.
Amounts withheld from each payment and the running total.
Date and evidence of practical completion.
Defects period and notified defects.
Date defects were made good or disputed.
Certificate, payment notice or final account event that triggers release.
Amount now due and the contractual payment date.

If the payer says the defects are not finished

Ask for a precise defects list and the contractual basis for holding the amount. Distinguish a genuine cost of completing or correcting work from an unexplained refusal to release all retention. Do not certify your own technical conclusion without the documents and, where proportionate, an independent assessment.

Adjudication may be available

Section 108 of the Housing Grants, Construction and Regeneration Act 1996 gives a party to a qualifying construction contract a right to refer a dispute to adjudication under a compliant procedure. The timetable is tight and the decision is generally binding unless and until finally determined elsewhere. Check the contract and take advice before serving a notice.

Questions people ask

What is a retention release?

It is the payment of money withheld under a construction contract once the agreed release event occurs. The trigger and calculation come from the contract, not a general rule that applies to every project.

When should retention money be released?

Often in stages linked to practical completion and the end of the defects period, but the wording differs. Check certificates, notices and the contractual payment date.

What if the client refuses to release retention?

Request the contractual basis and a payment breakdown, preserve the contract and certificates, and consider negotiation, adjudication where available or a court route. Do not rely on a verbal refusal.

Official sources to check

Links were checked while this page was prepared. Legislation, fees and court guidance can change; use the linked source for the current position.

Before escalating: preserve the contract, photographs, payment record and independent assessment. A structured evidence bundle is often more useful than a longer email.

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