Retention Money: What It Is and What to Do If It's Not Released

Retention money — a percentage of a contract's value withheld by the head contractor until practical completion or the end of the defects liability period — is a legal, common practice in Australian construction. It's also a genuine, recurring pain point, because it's sometimes mishandled or simply never released.

Where the law has moved

Because of how often retention money has been mishandled, several states have introduced statutory retention trust requirements — meaning the money legally has to sit in a separate trust account rather than the head contractor's general funds, specifically to protect subcontractors if the head contractor becomes insolvent.

If a head contractor won't release retention money

• Check your contract for the exact release trigger — practical completion, end of defects liability period, or a specific date
• Request release in writing, referencing the contract terms
• Use your state's Security of Payment Act process — a fast-track legal mechanism specifically designed for unpaid construction and trades work