Turnover & closeout
Retainage
Retainage is the percentage of each progress payment the owner holds back rather than pays out, released once the work is complete and accepted. It gives the owner leverage to see the project finished and the punch list closed, and contractors typically pass a matching hold down to their subcontractors. How much is held, when a portion releases at substantial completion, and what triggers final release are all set by the contract, and some jurisdictions regulate the terms.
Run it with the Photo Gate
Final inspection checklist for construction
15 items · 25 photos required
Why it matters
Retainage is the money that keeps the last, least glamorous work moving: the punch items, the closeout paperwork, the final inspections. It is a real cash-flow cost to contractors and subs, which is exactly why closing out cleanly and fast is worth the effort: the faster the work is proven complete and accepted, the faster the held funds release.
How it shows up on site
A portion often releases at substantial completion, with the balance held until the punch list is closed and the closeout package is accepted. Being able to show punch items closed with photos, final inspections passed, and the closeout documentation in order is what shortens the gap between finishing and getting paid.
Common mistakes
Assuming final retainage releases on its own once work looks done. Release follows acceptance of the completed work and the closeout documentation, per the contract. The exact terms, including any statutory limits, are the agreement's and the jurisdiction's call, not a rule of thumb.
Guides that use it
- How to reach substantial completionMeet the contract's usability standard, secure legal occupancy, close the walkthrough punch, and get the milestone certified with a defensible date.
- How to close out a construction projectMove from substantial completion to final completion: close the punch, finish commissioning, deliver the turnover documents, settle the contract, and release retainage.
Checklists that put retainage to work
Free, field-ready checklists, each with the photo every item needs before it can be submitted.
Related terms
- Substantial completionThe milestone where the work is usable for its intended purpose, even with minor punch items still open.
- Closeout packageThe compiled record proving the work was completed, inspected, and accepted, assembled to close out the contract.
- Punch listThe running list of incomplete or defective work a contractor has to fix before an area is accepted and closed out.
- Final walkthroughThe end-of-project walk where the owner and contractor inspect the completed work together and generate or verify the punch list.
- Schedule of valuesThe breakdown of the contract sum into line items of work, used to measure progress and support each payment application.
- Final completionThe milestone where every remaining item, including the full punch list and closeout deliverables, is finished per the contract.
Knowing the term is step one. Proving it is the job.
RTI holds the submit button until every mandatory item is answered and the photos are attached, then chains the record so it can be proven untouched later.
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