Money held back

By Paladin (***)

Date 01-07-2013 01:58

Recently did a structural job on a restaurant. The work was for a local construction company. They held back 10% of the total bill. The idea was to hold it 30 days in case something was not acceptable with the work. There is absolutely nothing wrong with the work, everyone agrees.
The construction company says this is normal for a company to hold back money for some period of time. It has been over two months and it seems I had to remind them of the delinquent money. They are now waiting for me to sign a lien release in front of a notary.The job was less than 10K. I made out very well for what I had in it, and really don't want to burn this bridge.

But is this really a usual practice to hold back a percentage for a specific time? I have never experienced it before. But I don't get around that much.

Floyd

By texwelder (***)

Date 01-07-2013 03:05

I have heard of this I have a uncle and a real good friend that are pretty high up in two different construction companies and this seems to be a more common thing now becuase of the vast amount of uneducated contruction subs that do shoty work it sucks for us fellas that do good work and take pride in our jobs

By Tommyjoking (****)

Date 01-07-2013 03:21

Floyd

It is very common in construction. Sometimes it is 30 days after initial payment, sometimes 90 days after completion...occasionally they try to withhold till the job is finished and the customer signs all the acceptance paperwork. Watch out for that last one, I worked on some 2yr long projects and I made them strike that from the contract and rewrite for 90 days. This has ONLY occurred with me when we had a written contract with payment terms, requirements, liabilities etc. clearly laid out in writing.

By Dualie

Date 01-07-2013 03:31

called a retainer, and its a real pain in the azz sometimes. I almost got in a fist fight over someone holding 10K hostage for a retainer when everything i touched had been buried in concrete for 120 days.

By Cactusthewelder (*****)

Date 01-07-2013 04:58

It is Normal for SOME Companies, Not all. It is called "Retainage" The Lien Release is normal when Final Payment is made. However, YOU need to get a Release of Liability as well that is signed from them

By swsweld (****)

Date 01-07-2013 07:52

It's a very common practice in my field. We do alot of work on military bases and some jobs last 1-2 years so they withhold 10% retainer so that they can get you back if your work needs any correction or modification that they won't pay extra for with a change order.

For instance, we do alot of underground pipe installation and if a leak developed 8 months after you hydrotested it and sold it to them, they have leverage to get you back to repair it. Most retainers are for 1 year. We factor this in and when you receive the large check from the retainer it's like getting a bonus check.

The notorized lein release is always part of the deal. That way they have proof of partial or final payment.

I guess it depends on your customer base and the field that you work in as to whether or not it is a normal practice. It is with us.

Good luck getting your money. It's always frustrating to have to 'work' to get the money when you have already done the real work.

Also, some customers will not enforce a retainer even if the contract specifies it. We ask up front especially with repeat customers but on some jobs it's non negotiable.

By Dualie

Date 01-07-2013 06:55

thats one of my biggest pet peeves is legalese. I don't mind contracts that cover everyones hindquarters but don't set out to baffle people in BS

By eekpod

Date 01-07-2013 11:24

Absolutely!! yes it is VERY common with most if not all of our structural and misc steel projects.
Your lucky it's only 10% retainage, it's not uncommon that they'll only pay 75%, then that last 25% they owe you, they'll cut in in half and half again so it takes 2 yrs to get the last 5% that usually is only about $5000 on what started out as a 1 million project.
Also yes you have to nag them it's just how its done, don't think they;ll just send a check cause its made the date it was supposed to, call them and remind, threaten whatever it takes to get the money, it's just business, at least in the Northeast that's how it is.