Retention Money Dispute — Claim Your Retention Under SOP | PayClaim

Retention Money Dispute — Claim Your Retention Under the SOP Act

Retention money is one of the most common sources of payment disputes in the Australian construction industry. Head contractors hold a percentage of your progress payments — typically 5–10% — as security against defects. But when the defects liability period ends, many subcontractors find that their retention is simply never released. No reason. No response. Just silence — or excuses.

Security of Payment legislation gives you a legal mechanism to claim withheld retention money. Here’s how it works.

What Is Retention Money?

Retention is a percentage of your contract value held back by the head contractor during the construction project. It’s meant to provide a financial buffer if defects arise during the defects liability period (typically 12 months after practical completion). Once that period ends with no unresolved defect claims, the retention should be released back to you.

The problem is that many head contractors treat retention as a soft loan — money they hold indefinitely with no intention of ever releasing it, hoping subcontractors will simply forget or give up.

When Can You Claim Your Retention Under the SOP Act?

In most Australian states and territories, retention money becomes a progress payment entitlement once the release conditions in your contract are satisfied (typically the end of the defects liability period). At that point, you can serve a payment claim under the Security of Payment Act for the retention amount.

Key considerations:

• Check your contract for when retention is due to be released — typically on practical completion and again at the end of the defects period
• Ensure the defects liability period has expired before claiming the final retention tranche
• Serve a payment claim for the retention amount — the head contractor must respond within 10–15 business days
• If they dispute the release or don’t respond, you can proceed to adjudication

What If the Head Contractor Claims There Are Defects?

Even if the head contractor claims there are outstanding defects, they must formally state this in a payment schedule — they cannot simply ignore your retention claim. If they issue a payment schedule disputing your retention claim, you can challenge that dispute in adjudication, where the adjudicator will assess whether there are genuine defects that justify withholding your money.

Vague or unsubstantiated defect claims generally don’t hold up in adjudication.

How PayClaim Helps You Recover Retention

1. Start your claim: Tell us the retention amount, your contract, and the head contractor’s position. Quick online form.
2. We review your entitlement: Our team assesses when your retention is due and advises on the best approach.
3. Payment claim for retention: We draft a compliant payment claim specifically for the retention amount and serve it correctly.
4. Adjudication if needed: If the head contractor disputes the release, we manage the adjudication process on your behalf.

Flat fee. No lawyers. Most retention disputes are resolved within 10–20 business days.

Don’t Let Retention Become a Gift to the Head Contractor

Retention money is your money — held in trust, not owned by the head contractor. Start your free claim with PayClaim today and get your retention released.