Glossary
What Is Retention Money in Interior Contracts?
Retention money explained for interior firms: definition, example, common mistakes and FAQs.
Published · Updated · By DecorFlow
Key points
Agreed in writing
The percentage and release conditions belong in the contract.
Held, then released
The amount is withheld from payments and released when the conditions are met.
Tracked per bill
Each bill should show how much was held so totals reconcile.
Definition
Retention money is a portion of a payment held back until the work has been completed and checked, or until a defect period ends. It gives the paying party some security that unfinished or faulty work will be put right. The percentage and release terms are set in the agreement.
An example
A studio agrees a retention with a carpentry subcontractor. Each bill shows the amount held back, and the held total is released only when the agreed conditions are met. The percentage and timing come from the written agreement, not from a standard.
Common mistakes
- Not writing down when and how retention is released.
- Holding retention without a defined defect period.
- Forgetting retention when reconciling vendor payments.
- Applying a percentage from another project without checking the contract.
Common questions
Is retention required by law?
It is a contractual term, not a general requirement. Ask a legal advisor how it should be worded for your agreement.
What percentage is usual?
There is no single figure. It depends on the trade, the contract and what you agree with the other party.
Does DecorFlow record retention?
DecorFlow's vendor bills record a retention amount and a TDS amount alongside the payment. Confirm the details in your account before relying on them for reporting.
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