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Common Retention Issues
As the construction process can take a long time, by the time of its completion, a company may fall into financial difficulty or struggle with cashflow in other ways; resulting in them finding reasons not to pay the retention owed.
Common excuses for withholding payment include claiming there are defects or that they are waiting on the employer to release their own retention. The latter argument is always a bad one: Sections 110 and 113 of the Housing Grants, Construction and Regeneration Act 1996 (also known as the Construction Act) prevent parties from withholding payment until they have been paid themselves.
- Notice to Withhold/Pay Less
If the company cites defects for withholding the retention, then that company must adhere to the provisions for making a notice of withholding/notice to pay less as stipulated by the contract or Section 111 of the Construction Act. If the company holding the retention does not serve a valid notice to withhold or pay less, the retention must be repaid even if the defects claim is valid.
A company is insolvent when it cannot pay money it owes on time or at all, and can be a big problem in large and lengthy construction projects. When the time comes for contractors and sub-contractors to be paid or recover retention payments, if the client has fallen into financial instability, this can lead to losses.
How Do I Get My Retention Money Back?
It is incredibly frustrating to have to wait for a retention payment to be released when you have completed satisfactory work and rectified any defects. In this case, contacting experienced retention recovery lawyers should be your next step to recovering money that is rightfully yours.