what is a retainage for an attorney

What is Retainage? Retainage refers to the deliberate withholding of a portion of an agreed-upon contract price or payment until the work under the contract is substantially complete.

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What is retainage?

Legal Definition of retainage : a percentage of a contract price retained from a contractor as assurance that subcontractors will be paid and that the job will be …

Is there a retainage rule for contractors?

Retainage refers to the deliberate withholding of a portion of an agreed-upon contract price or payment until the work under the contract is substantially complete. Such withholdings occur to assure a contracting party that the contractor or subcontractor will complete the construction project consistent with the terms of the contract.

What is retainage fee in construction?

Retainage retainage n : a percentage of a contract price retained from a contractor as assurance that subcontractors will be paid and that the job will be completed . Source: Merriam-Webster's Dictionary of Law ©1996. Merriam-Webster, Incorporated. Published under license with Merriam-Webster, Incorporated.

When do you have to negotiate a retainage fee?

ASA Midwest Council Chapter Attorney I. Introduction “Retainage” is a chameleonic term that changes its hues and shades depending on the context in which it is used and the party interpreting or invoking its use.[2] In the construction industry retainage is, with good cause, generally considered to be funds held back to protect the

What is the purpose of retainage?

Purpose of Retainage Retainage, also referred to as a “hold back,” helps the owner ensure a contractor sufficiently completes the project, and that the work meets with their approval and terms of the contract. It also provides a financial incentive for the contractor to see the project through to its successful finish.Apr 21, 2021

What does retaining an attorney mean?

Finally, don't be confused by the terms "retainer" or "retainer agreement." Generally, these are not the same as having a lawyer "on retainer." When you “retain” a lawyer, that simply means that you are hiring them, and the money you paid to the attorney is known as “the retainer.” The agreement signed when someone ...Jan 4, 2022

What does it mean to hold retainage?

Retainage is the withholding of a portion of the funds that are due to a contractor or subcontractor until the construction project is finished. It is meant to serve as a financial incentive and an assurance that the contractor will complete the project in a satisfactory manner.

What is a 10% retainage?

On a typical project, the retainage percentage is applied to each progress payment. So on a $100,000 contract with 10% retainage, the contractor doesn't have to fork over ten grand at the beginning. Instead, the contractor will deduct the retainage from each payment application.Feb 15, 2021

How are retainer fees calculated?

Calculate the Retainer Fee Multiply your hourly rate, with tax included, by the number of hours required to get your retainer fee. Any other expenses should be added to this number, such as supplies or processing and legal fees.

How much does it cost to have a lawyer?

Throughout the United States, typical attorney fees usually range from about $100 an hour to $400 an hour. These hourly rates will increase with experience and practice area specialization.Aug 17, 2021

When should you bill for retainage?

What Is Retainage? Also called “retention,” retainage is a percentage of a contract, often 5-10%, that can't be billed until the entire project is complete and the client has approved the work. Its purpose is to give the client recourse if they aren't satisfied with the work.Sep 11, 2017

How does retention work?

Retention is essentially money promised that is held back by the client to ensure themselves against contractor failure. Usually, retention is set at 3% or 5% of the total work value. That money is deducted from payments made to the contractor, who then deducts it from payments made to any subcontractors.

What is retention applied to?

The purpose of retention is to ensure that the contractor properly completes the activities required of them under the contract. In the US, this is known as Retainage. Retention can also be applied to nominated sub-contractors, and the main contractor may also apply retention to domestic sub-contractors.Dec 8, 2021

How should retainage be recorded?

The client, who owes retainage to the contractor, records retainage as a liability. For example, if a contractor works on a $100,000 project with a ten percent retainage, then they will record $90,000 as accounts receivable and $10,000 as retainage due.

How much is retention usually?

How much is held in retention? Usually up to five percent of the total contract value is held by the head contractor until the subcontractor has completed the job and fixed any defective work.May 31, 2021

What is the difference between retention and retainage?

In construction, the terms retention and retainage are mostly used interchangeably. However, in some cases, there is a slight difference: Retainage in construction may refer specifically to the money that is being retained, while retention refers to the act itself.Jul 6, 2020

How long is retainage withheld?

Retainage is typically withheld from a contractor throughout the entire duration of the project, and only paid after substantial completion . Ho...

What is a normal amount of retainage?

Retainage is most commonly withheld at either 5% or 10% of each payment on a project. (See the Ultimate Guide to Retainage to learn more about re...

How is retainage calculated?

Retainage is typically calculated as a percentage of each payment made during a project. If you are working on a $100,000 contract with retainage s...

When can I file a mechanics lien for retainage?

The short answer is: You absolutely have a right to file a mechanics lien if you haven't received your payment, and you can file a claim at any p...

Why is retainage withheld?

Retainage is often withheld throughout a job to protect the owner and/or general contractor against non-compliance, non-performance, and other proj...

How can I collect retainage faster?

Even if the contract stipulates that retainage is withheld until the completion of the project, you may be able to negotiate an early release of t...

What's the difference between retainage and retention?

Retainage and retention generally both mean the same thing, though "retainage" often refers to the amount of money withheld, and "retention" refers...

Does retainage change according to the project type?

Retainage amounts and legal limits vary between private, state, and federal projects. The amount of the contract price that can be withheld and the...