1. How much they are actually holding

Retention usually accrues at around 5% of each progress claim until it reaches a cap of about 5% of the contract value. Some contracts and state rules cap the combined retention and other security lower. In Queensland, for example, total security generally cannot exceed 5% before practical completion and 2.5% after it. Check the percentage, the cap, and whether it is calculated on the contract sum or on amounts claimed, so you know the real figure sitting out of your account.

2. The two release triggers, and the dates behind them

Most subcontracts release retention in two stages: half at practical completion, and the balance at the end of the defects liability period, often around 12 months later. That second half usually only comes back once notified defects are rectified, or when the final certificate issues, which can fall months after the DLP ends. Write both dates in your diary the day you sign, because nobody else is going to remind you.

3. Whether you can swap cash retention for a bank guarantee

Many contracts let you substitute cash retention with a bank guarantee or a retention bond, which keeps your cash working instead of sitting idle as security. Some standard forms allow the swap, but heavily amended head-contract versions often narrow the right or attach conditions, and some states (Western Australia, for construction contracts from February 2024) have specific rules for substituting a performance bond. Check whether substitution is allowed, and what it costs you, before assuming it is on the table.

4. What actually triggers release in your version of the contract

Standard forms have a defined release mechanism, but main contractors run large contracts teams and amend those clauses in their own favour. Watch for release that is made conditional or discretionary, wide set-off rights that let them dip into your retention for their own claims, and wording that lets them hold retention against unrelated jobs. Read the amended clauses that shift risk, not the standard form you remember. That is where retention quietly gets harder to get back.

5. Where your retention is actually held

Cash retention is only as safe as the party holding it. If the head contractor becomes insolvent, unprotected retention can be hard to recover. Some states now require it to be held in trust: in New South Wales, head contractors on projects over $20 million must hold retention in a trust account and give subcontractors a ledger at least every three months. Queensland and Western Australia have their own trust and security regimes. Find out whether a trust applies to your job, and ask for the ledger if it does.

6. The paperwork that unlocks it

Retention does not release itself. You generally need the practical completion certificate, evidence that notified defects are fixed, and a properly formatted claim for the money. Keep the certificate, your defects sign-offs and site photos, and a running note of what is owed and when it is due. When it is time to claim the balance, the file you have kept is what gets it paid without an argument.

7. Do not let it drift: treat overdue retention as a payment claim

The most common way subbies lose retention is simply forgetting it exists once the job is finished. Diarise the DLP end date, chase release in writing, and if it is overdue and the contract allows, a payment claim under the relevant Security of Payment Act is often the fastest lever to get it moving. Retention that is genuinely due is money you are entitled to. Treat it like any other unpaid claim.

A quick retention checklist

  • The retention percentage and cap, and how it is calculated
  • The two release dates: practical completion and the end of the defects liability period
  • Whether you can substitute a bank guarantee or bond
  • Any amended set-off or discretionary-release wording
  • Whether the money must be held in a trust account in your state
  • The documents you will need to trigger release, kept from day one

Retention is one of the few parts of a job where doing nothing almost guarantees you lose money. A five-minute check when you sign, two dates in your diary, and a tidy file at the end is usually the difference between retention that comes back and retention that does not. If you want a plain-English read on the clauses in a subcontract before you sign, our free tools are a good place to start.