What is retainage release and when does it happen?

Retainage release is often the single largest payment event in a construction project, because retainage typically runs 5 to 10% of the total contract value and accumulates across every progress billing. A $500k project with 10% retainage holds $50k back until release — money the contractor has earned but cannot access until the milestone is met.

The trigger for release varies by contract. Some release retainage in two stages: a portion at substantial completion and the remainder at final completion or after a warranty period expires. Others release the full amount at substantial completion. Many states have prompt payment statutes that set a hard deadline for retainage release and allow contractors to collect interest on amounts held past that date. When retainage is withheld beyond the contractual terms, mechanics liens are the primary tool contractors use to compel payment.