5 Reasons Construction Retentions Get Stuck (And How to Unstick Them)

The Project Never Reached Practical Completion

The Problem: If the overall project hasn't been signed off as "practically complete," your retention clock hasn't even started. This happens when main contractors delay PC certification—sometimes for years—while they tie up loose ends with other trades or negotiate variations.

Why It Happens: Main contractors often have little incentive to rush PC certification. They're not losing money; you are. Some deliberately stall to keep cash in their business.

The Solution: Review your contract terms carefully. Many standard forms (JCT, NEC) allow subcontractors to claim retentions based on sectional completion or when their specific works are finished, not when the entire project achieves PC. If your contract allows this, issue a formal notice referencing the relevant clause. If it doesn't, your leverage is weaker—but you can still push back by threatening adjudication over unreasonable delay.

Alleged Defects (Real or Imagined)

The Problem: The main contractor claims there are defects with your work and withholds the retention until you fix them. Sometimes these are legitimate issues. More often, they're vague allegations without proper supporting evidence—used as a pretext to delay payment.

Why It Happens: It's an easy stalling tactic. A simple email saying "we've identified issues with the M&E installation" can buy the main contractor months of breathing room, especially if you don't challenge it immediately.

The Solution: Demand specifics. Under the Housing Grants, Construction and Regeneration Act 1996 (as amended), any deduction from monies owed—including retentions—must be supported by a valid withholding notice. This notice must:

• Be issued within the contractual timeframe (usually 5 days before payment is due)
• Clearly state the amount being withheld and why
• Reference the specific defects or contractual breaches

If they can't produce this, they're in breach. You can issue a notice of adjudication and pursue immediate payment. Most main contractors back down when faced with a properly drafted pre-action letter citing their failure to serve a valid withholding notice.

The Main Contractor Has Cash Flow Problems

The Problem: The main contractor is using your retention to fund their own operations. This is more common than you'd think, especially among mid-tier contractors operating on thin margins.

Why It Happens: Retentions held across multiple projects can add up to significant working capital. When cash gets tight, these funds become an attractive—albeit illegal—lifeline.

The Solution: This is where things get tricky. If the main contractor is genuinely insolvent, pursuing them through adjudication might get you a judgment but not your money. Instead:

• Check for retention bonds: Some contracts require the main contractor to hold retentions in a separate trust account or provide a bond. If they haven't done this, you may have a claim against the employer directly.
• Escalate to the client: Send a polite letter to the project client/employer explaining the situation. They have a vested interest in ensuring their contractors don't abuse the payment chain, and they may pressure the main contractor to release funds.
• Consider statutory demand: If the debt is undisputed and over £750, you can issue a statutory demand. This puts the main contractor on a 21-day clock to pay or face potential winding-up proceedings. It's aggressive, but it works.

Administrative Incompetence

The Problem: Nobody at the main contractor's office actually knows the retention is due. The project manager who commissioned your work has moved on, the accounts team is overwhelmed, and your retention has fallen through the cracks.

Why It Happens: Construction companies have notoriously poor record-keeping, especially on smaller subcontract packages. After 12-18 months, your file is buried under newer projects.

The Solution: This is the easiest one to fix. Send a formal written request for payment, citing:

• The original contract reference
• The date of practical completion (or your completion date if sectional)
• The retention amount owed
• The relevant payment terms from your contract

Address it to multiple people: the original project manager, the commercial manager, and accounts payable. Copy the client if necessary. Most of the time, this prompts someone to actually look at the file and process the payment.

Contractual Ambiguity

The Problem: The contract doesn't clearly define when retentions are due, or there's a dispute over whether the defects liability period has even started.

Why It Happens: Poorly drafted bespoke contracts, or amendments to standard forms that create contradictions. For example, one clause might say retentions are due 12 months after PC, while another refers to "final completion" without defining what that means.

The Solution: This is where you need legal interpretation. An experienced construction disputes consultant can review your contract and identify the strongest position. Often, ambiguities are resolved using the contra proferentem rule—meaning terms are interpreted against the party that drafted them (usually the main contractor).

If the ambiguity is severe, you might need adjudication to get clarity. But first, try a detailed letter setting out your interpretation with references to case law or industry standards (like the JCT guidance notes). Many disputes settle once the main contractor realizes their position is weak.