When is retainage released on a commercial job?

Nobody searches this question while the job is going well. They search it in month nineteen, with a job that closed in the spring, a number on a spreadsheet that may or may not still be right, and a GC’s PM who has moved to another project and does not answer email.

The short answer is that retainage is not released on a date. It is released when a set of gates clear, and almost none of those gates are things you control. Here is what actually governs the timing on commercial work, and how to run the chase.

Retainage is already yours — it is being held, not owed later

Worth saying plainly, because it changes how you treat it. Retainage is not a future payment or a bonus at the end. It is money you earned and billed, withheld from draws you already submitted, as security that you will finish and close out properly.

Five or ten percent commonly comes off every draw, though some states cap retainage, especially on public work. Because each draw’s holdback is small, it rarely gets flagged as it builds — and by closeout it can be one of the larger receivables on a job the office has mentally moved past.

That is the whole problem. The amount is created monthly by the person doing billing. It is collected, eventually, by someone looking at a closed job.

The three documents that decide your timing

There is no industry answer to “when.” There are three documents, read in this order.

Your subcontract. It states the retainage percentage, what triggers reduction or release, and what you owe before release. Read the actual clause, not the summary someone gave you in week one.

The prime contract, through flow-down. This is the one subs skip, and it is usually the one that controls. Most subcontracts flow down the prime contract’s payment terms, which means your retainage is tied to the owner releasing retainage to the GC. The owner is not releasing on your scope. They are releasing on the building.

The closeout requirements. Sometimes in the subcontract, often in a separate closeout manual issued near the end. It is a list, and the list is the gate.

If those three disagree, which one controls depends on the contract wording and your state’s law. If you cannot tell, that is a question for your attorney, not for an article.

State law can override the contract

Many states have prompt-payment or retainage statutes that cap how much can be held, especially on public work, and set how fast a GC must pass retainage down once the owner releases it. California, for example, gives the GC 10 days after it receives retention (Civil Code §8814), and on federal work a prime generally has 7 days to pay a sub after it is paid (31 U.S.C. §3905). The rules, caps and exceptions differ by state and by public versus private work, and they change. Check your state’s rules and your contract with a construction attorney. This is not legal advice.

The four gates, in the order they clear

1. Completion — and whose completion counts

Your scope finishing is not the trigger. This is the single most common misunderstanding, and it costs subs a year.

An electrical sub might finish rough-in and trim-out eight months before the building reaches substantial completion. Under flow-down terms, their retainage waits for the building. The crew is gone, the final draw was certified, and the money sits because the lobby glass is late and the elevator has not been inspected.

Two distinctions worth knowing:

• Substantial completion — the owner can occupy and use the work for its intended purpose. This is the date that usually starts the clock on retainage reduction, and the date warranties typically run from.
• Final completion — everything done, including punch, with closeout accepted. Full release is usually tied here.

Some contracts allow early release on an early-finishing trade’s scope. Some allow retainage to step down — say from ten percent to five — once the job passes a completion threshold. Both exist, neither is automatic, and neither happens unless you ask. Find out which your contract allows while the job is still active and the PM still cares about you.

2. Punch list signed off

Punch is the gate that moves slowest for the least money. A short punch list on your scope, worth a crew-day, can hold a retainage balance for months — not because the work is hard but because the sign-off requires a walk, and the walk requires a superintendent whose attention is on the trades still working.

The practical response is to treat punch as a billing task rather than a field task. Get the list in writing, close it fast, and get written acceptance back. “We did it” is not a gate that clears. An email confirming it is.

3. The closeout package

This is where retainage actually dies. The work is accepted, the balance is owed, and the release is sitting behind a document nobody ever produced.

What is on the list varies by trade and by job, but the usual suspects:

• As-built drawings, in whatever format and quantity the closeout manual says
• Operation and maintenance manuals for installed equipment
• Warranty letters — yours, and the manufacturers’
• Test and inspection reports, and sign-offs from the authority having jurisdiction
• Owner training, with a sign-in sheet proving it happened
• Attic stock or spare materials, delivered and receipted
• Final certified payroll, on jobs that require it

Mechanical and electrical subs carry the heaviest version of this list, because theirs is the equipment the building operator has to run. A fire sprinkler sub’s final inspection sign-off is both a code document and a retainage gate.

Ask for the closeout requirements at the start of the job. Not at the end. At the end you are assembling a year of paperwork from memory.

4. Lien waivers, in the right order

Nearly every release is conditioned on a final waiver from you, and often on waivers from your suppliers and lower-tier subs too. The sequencing matters and it trips people up: a conditional final waiver is what you send to get the final payment — it only takes effect once that payment clears. An unconditional final is what you sign after the money has actually arrived. Signing an unconditional waiver before the check lands gives away the leverage you were holding. Some states require their own statutory waiver forms word for word, so use the form your state requires.

Lien deadlines are statutory, they differ by state, and they do not pause because a GC is slow. Nothing here is legal advice; if a retainage balance is drifting toward a filing deadline, that is a conversation with a construction attorney, and it is cheaper to have it early.

Why subs lose this money, and the four habits that fix it

Retainage is rarely lost to a dispute. It is lost to attention. The job is closed, the workbook is archived, the PM who ran it is on three new jobs, and the only record is a column someone stopped maintaining in month nine.

Four habits that make the difference:

1. Track retainage as a receivable, not as a column inside one job’s file. The question you need answered is “what is held across everything, and by whom” — and fifteen separate workbooks cannot answer it.
2. Reconcile against the GC’s certified numbers, not your own. Your held figure and theirs will disagree the moment a change order enters the schedule of values on only one side. Catch it at the draw, when both parties still remember.
3. Start the closeout package at seventy-five percent complete. Everything on the list is easier to produce while the job is live.
4. Put the final retainage billing on the calendar the day the job reaches substantial completion. It is a scheduled task, not a thing you remember.

Retainage held across closed jobs is the specific number worth reading monthly. It is the one that grows by neglect.

How SubMark handles it

SubMark treats retainage as something recorded where it is created rather than reconstructed at the end:

• Recorded per draw in dollars, not just a percent. Amount drawn minus retainage is the check amount, and entering any two calculates the third — so the number is produced by the billing you were already doing.
• The rate pre-fills from the job’s subcontract terms and stays editable per draw, for the contracts that step retainage down partway through.
• Totaled across every job and every GC, for any month, quarter, year, or all time — including jobs that are otherwise finished.
• The final retainage billing is flagged as the job’s last draw and treated as a release, not as new billing, so billing out retainage cannot push revenue past contract value.
• Lien waiver tracking on the four waiver types — conditional and unconditional, progress and final — moving from Draft to Signed to Sent to Received, with the through date, the payment amount and the executed copy on the record. SubMark tracks the waivers you send out. It does not generate them, and collecting your suppliers’ waivers still happens outside the system.
• Drawn, certified and received stay three separate numbers, because the gap between them is the conversation you are about to have.

The structure behind all of it is the schedule of values — how to build one that bills clean is the companion to this article, because a line structure the GC never agreed to is why held figures disagree at closeout. There are also dedicated pages for retainage tracking and lien waiver tracking. Two trades feel the tail worst: doors, frames and hardware, where three unfinished openings out of four hundred hold an entire contract, and waterproofing, whose last scope is a sealant job a year after the membrane was buried. If your GCs bill on the AIA format, here is how SubMark fits alongside AIA billing.

Office staff are what you pay for. Field users and the subs you invite are free and unlimited — see how pricing works.

The one-page version

Retainage releases when completion is reached on the terms your contract actually flows down, punch is accepted in writing, the closeout package is delivered in full, and the waivers are executed in the right order. Your scope finishing early does not start the clock. Nobody will chase it for you.

So the honest answer to “when is retainage released” is: later than you think, and only if someone in your office owns it.