When is retainage usually paid?

Retainage is a common practice in construction contracts where a certain percentage of the payment is withheld until the completion of the project. This practice serves as a financial incentive for the contractor to finish the work to the satisfaction of the owner and to address any issues that may arise during the final stages of the project.

Paying retainage with the final payment ensures that the contractor has the necessary motivation to complete all aspects of the work, including corrections, touch-ups, and any outstanding items that may require attention after the bulk of the project is done. This structured payment timeline also allows the owner to verify that the work meets the required standards before releasing the final funds.

While some contracts might include provisions for partial retainage amounts or other payment arrangements, the standard industry practice is to release the retainage with the final payment once compliance and satisfaction with the work have been confirmed. This approach minimizes the risk for the owner and ensures quality in the completed project.