Retention money: how it works, and when it comes back
Retention is a percentage of each progress payment that your client holds back — commonly 5–10% in market practice, with the exact percentage set by your contract, not by law — as security that you finish the work and fix defects. It normally comes back in two halves: the first at handover or taking-over, the second after the defects liability period ends. It is your money on a timer. The usual way firms lose it is not the contract — it is forgetting it.
How does retention build up?
Retention is taken a little at a time, not in one lump. Each time you are paid for progress, the payer deducts the retention percentage from that payment and holds it. Across a long job the held amount grows quietly, which is why it surprises people at the end.
A simple picture: on a contract of AED 200,000 with 10% retention, AED 20,000 is held across the job — AED 2,000 from every AED 20,000 payment. Your payment certificates show the deduction on each one; the running total of what is held should never be a mystery.
- Each progress payment is reduced by the retention percentage.
- The held amounts add up to the full retention percentage of the contract value.
- The certificates record both what was paid and what was held — keep them all.
When does retention come back?
In two releases, both set by your contract. The first half is normally released at handover — when the work is taken over and the relevant certificate is issued. The second half is released after the defects liability period ends, once any defects you were told about in that period are fixed.
Neither release is automatic in practice. The dates pass silently inside a busy project, and nobody at the client's office is tasked with remembering your money. Put both dates in your diary the day you sign, and ask for each release in writing when it falls due, quoting the contract clause and the certificates.
How do you track what you are owed?
Keep one running record per contract: the contract value, the retention percentage, the total held so far, the handover date, the defects-period end date, and what has been released. One line per job is enough — the failure mode is the total living in somebody's memory or in a pile of certificates nobody adds up.
In InstaJack, claims track retention against each job through to its release day, alongside the certificates — the held amount is always a number on a screen, not a recollection. InstaJack does not recover retention for you and cannot make a client release it; it keeps the figure and the dates in front of you so you ask on time. When a release falls due and does not arrive, chase it like any other late payment — the ladder in chasing a late invoice works for retention too.
Keep reading
Guides
Plain answers for small trade firms in the UAE and Saudi Arabia: chasing payment, retention, VAT invoices, deposits…
Read →Tax invoice anatomy
The anatomy of a UAE tax invoice: the words Tax Invoice, your TRN, a sequential number, VAT per line — each field e…
Read →Progress claims
How a progress claim becomes a payment certificate for a small subcontractor: value the work, submit it, and invoic…
Read →Deposits & advances
How to set a deposit that covers materials without scaring the client: tie it to the materials list, write it on th…
Read →Asked often, answered straight.
Is retention required by UAE law?+
No. Retention is a contract term, not a legal requirement. The percentage, the cap and the release dates are whatever you signed — commonly 5–10% in market practice. Read your own contract before assuming any of those figures apply to you.
When exactly is the second half released?+
After the defects liability period in your contract ends and the defects notified in that period are made good — commonly twelve months after handover, but your contract sets the period. Ask in writing as soon as the date passes.
Can I ask for retention to be reduced or replaced?+
Before you sign, yes — everything is negotiable then. Some clients accept a lower percentage, a cap, or a guarantee in place of cash retention. After signing, the contract governs. If the amount is significant, take advice before agreeing a swap.
Does retention apply to small private jobs?+
Only if your quote or contract says so. Many small firms do not use retention on villa and homeowner work at all, and use deposits and stage payments instead. If your paperwork never mentions retention, none should be deducted.