How to Navigate Retainage Challenges Part 2

Our Jacksonville construction attorneys are aware of the ongoing conflict regarding retainage in the construction industry. Many construction professionals are advocating for reform or for the elimination of retainage altogether. Either way, the construction industry must navigate the challenges wisely.

This final article will discuss some alternatives to retainage and responses to nonpayment. To get a better understanding of what retainage is, the associated problems, and how to make it work for everyone, please read part one of our article.

What to Do If a Client Doesn’t Pay

Owners and contractors may withhold retainage as a form of security to ensure the work is completed. They may also hold on to the money to replace a contractor or subcontractor for nonperformance with another more expensive contractor or subcontractor. However, there is no excuse for withholding a retainage if an individual has completed the work.

If you’ve completed work and the client is withholding funds, you should file a mechanics lien, with the help of a Jacksonville construction attorney if necessary. In Florida, this claim must be filed within 90 days of your last work performance. It must also be served on the owner 15 days after you file it and must be enforced within 1 year after the lien is recorded. To preserve your lien rights you must stay on top of these important deadlines. Please note, interest, attorney fees, and penalties associated with a retainage cannot be included in your claim, however, a lawsuit is another story altogether.

Can Compromises Be Made?

As we mentioned earlier, retainage is the norm in the construction industry, but professionals are finding ways to decrease or eliminate retainage where possible. If retainage is a must, holding the retainage funds in an escrow account, approving line item releases, negotiating interest, allowing bonds, or by reducing or releasing retainage funds upon project completion are great ways to compromise.

If you would like to speak with a Jacksonville construction attorney, please contact us at 904.425.5030, or submit our contact request form.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

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