Release Of Retention In Construction Contracts

retention in construction pay problems

Release of retention in construction contracts can be a serious problem.

Sometimes it’s so difficult to get your retention released you might think, at the end of the day it’s not worth the fight.

You’ve done the work. Or, maybe the defect liability period is ending. You’re keen on getting any retention payable.

You send your last invoice – the invoice for the security retained by the people you subbed out to. You wait. You keep checking your account. Nothing. You call up the people you worked for and ask where your retention amount is.

No one seems to know.

Here is a Typical Story About Someone Trying to get their Retention Pay…

Mitch is a builder. He and his team work hard for a head contractor, a large multinational company, on a site over near Bondi Beach. Every month, Mitch sends his invoice to the head contractor. Every month his invoices are paid by the head contractor, no questions asked.

Mitch and his team finish the job. They’ve done well. There have been no issues raised by the head contractor regarding the quality of the work. Everybody is happy.

Mitch emails an invoice to the head contractor for the money held in security by the head contractor. The head contractor held on to $20,000.00 in retention. Mitch waits 14 calendar days and checks his business account. But the head contractor hasn’t paid him.

He rings up the head contractor. Clyde, the financial controller, is out to lunch. Mitch is assured by Clyde’s secretary that Clyde will get back to him. Over the next couple of days, Mitch tries to get a hold of Clyde again, but Clyde always seems to be unavailable. Mitch begins to get annoyed. When Mitch calls, he is bounced around on the switchboard from person to person. No one seems to be able to help him.

Mitch eventually hangs up, frustrated. A familiar feeling of dread comes over him. He is an experienced builder and knows the industry. This sort of thing has happened to him and people he knows before.

Mitch is really counting on that $20,000.00. He has staff to pay and materials to source for his next job.

But he has to get on with it. He’ll deal with it later. Mitch and his team start work on another job for another contractor, over in La Perouse.

Over the next three weeks, Mitch keeps trying to contact various people at the head contractor. He sends emails and leaves voicemails.

Eventually, while onsite at La Perouse he gets a phone call from Clyde. Clyde, who is usually friendly and approachable, seems awkward and standoffish.

I’ve been trying to get my retention off you guys for weeks,” says Mitch.

Well, this is the problem, Mitch,” says Clyde. “The work you did was simply not up to standard. There are serious defects. Apparently, these were raised with you months ago, yet you failed to rectify them. I’m afraid retention release is out of the question.

Defects?” says Mitch, “What kind of defects? No one ever raised defects with me or my team. We’re professionals. I’m telling you there are no defects. You’ve been getting the wrong information, mate.

I can assure you,” bristles Clyde, “that there are many, many defects. The entire job you and your ‘team’ did is defective. Consequently, you will not be receiving any payments from us, moving forward.

What?” screams Mitch. “Listen, Clyde, you pay me my security or I’ll take legal action!

You’ll get your ‘security’,” Clyde says smugly, “when Hell freezes over. And don’t even think about taking legal action, Mitch. We have an entire firm of solicitors at our disposal. We’ll have you tied up in court for years.” Clyde then sneers, “Just try it. You’ll lose Mitch. You’ll end up paying our legal fees by the end of it.”

The conversation deteriorates into a heated argument that ends when Clyde hangs up on Mitch.

Does Mitch’s Retention Release Problem Sound Familiar?

Retention money in construction contracts is a huge issue in the industry. There are people out there that will look for any excuse to wriggle out of making their last payment.

Clyde has a point. If Mitch tries to sue the head contractor in court, Mitch will be taking a huge risk.

If only Mitch knew about Security of Payment. Mitch could have his claim for retention assessed by an independent adjudicator within weeks.

Mitch could avoid the slow, stressful and expensive court system. If Mitch is successful at adjudication, the only time court comes into the situation is when Mitch files his successful determination with the court registrar.

Filing a successful adjudication determination with the court registrar is a pretty simple matter. Once this is done, Mitch will have a judgment debt against the head contractor. Mitch can then use this judgment debt to, for example, garnishee the head contractor for his retention amount.

Remember, if you’ve done work or provided related services in the construction industry, you have a right to have your claim independently assessed by a Security of Payment adjudicator.

Contact Us For Help With Release of Retention in Construction

Get paid for work done by contacting Lauderdale Construction Lawyers for assistance with Security of Payment Adjudication. We are the experts when it comes to the Building and Construction Industry Security of Payment Act.

To book your appointment to discuss your claim further with one of our construction law professionals call (02) 9804 7119.