Retention is the slice of every progress payment the other side holds back as security against defects — and getting it back is where a lot of tradies quietly lose money. Here is how much they can hold, where it has to sit, when it is released, and how to claw it back if they sit on it.
How much can be held
- Market norm: about 5% of the contract sum, built up by holding around 10% of each progress payment until the 5% cap is reached. Some riskier packages run 5–10%.
- QLD has statutory caps (QBCC): no more than 10% from any one progress claim; total retention no more than 5% before practical completion, dropping to 2.5% after.
- Everywhere else it is set by contract — typically 5% total, split 2.5% at practical completion and 2.5% at the end of the defects liability period.
Where retention has to sit — trust accounts by state
This is where the states diverge:
- QLD: a retention trust account is required where cash retentions are withheld on a project-trust job (one per trustee, includes GST, QBCC-notified). See QLD BIF Act & Project Trusts.
- NSW: head contracts $20 million or more must put subbie retention into an approved retention money trust account (deposited within ~5 business days).
- WA: retention trust accounts apply to eligible contracts from about $1 million under the 2021 Act.
- VIC: no universal retention trust regime — but VIC's SOP law lets you claim retention as part of a payment claim once it is due, which gives subbies real leverage without a dedicated trust statute.
When it is released
Release is almost entirely contract-driven:
- Practical completion (PC): about half the retention (commonly 2.5% of contract value) is released when the work is fit for use and handed over.
- End of the defects liability period (DLP): the balance (the other ~2.5%) is released when the DLP ends and any notified defects are fixed. DLPs are typically 6–12 months — purely contractual, so check yours.
- The formal triggers are certificates: practical completion, then a final or making-good-defects certificate.
If they will not release it
- SOP adjudication — the best first move. Once the trigger (PC or end of DLP) has occurred, include the due retention in a payment claim — retention is treated as "payment" for completed work. No schedule or no payment → apply for adjudication.
- Court: sue for the unpaid retention as a debt or as damages for breach.
- Trust and regulatory remedies (NSW/QLD/WA): where a trust applies, mishandling carries regulator penalties — in QLD potentially personal liability for company officers — so complain to the regulator alongside your adjudication.
The playbook: issue a clear retention payment claim the moment it is due → chase in writing → if nothing moves, start SOP adjudication, with trust-law and regulatory pressure where it is available.
Common mistakes
- Not claiming retention through a SOP claim once the release trigger has passed.
- Not diarising the DLP end date — and never chasing the balance.
- Accepting more than 5% retention with no cap or release schedule.
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