flown-the-coop said:

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Sasappis seems fairly knowledgeable on this and may chime back in. Getting a residential contractor to agree to retainage on payments is not something I have seen often. I am specifically referring to a homeowner : general contractor scenario not a major builder : contractor situation.

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Agreed. Retainage for major projects would be in the form of holding back 10% (for example) of each payment.

For the residential project with my family, we haven't hired a general contractor in a while, so I don't know what's normal in that scenario. We hire subs directly and usually buy the materials if we can.

None. The year period in which they have to attempt to foreclose on the lien and get paid passed. So I had to sign a non disparage agreement for them to release the lien. If the legal process wasn't such a financial money out I would've pursued getting reimbursed for the shoddy work and the other damage to my house. Instead we
Just went out separate ways and we are not allowed to disparage each other. Stupid but this way I didn't give them anymore money or have to pay an attorney $15k to win $8k

SweaterVest said:

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Thanks. So if I he provides a lien waiver from subs at each draw I will be protected from future liens then, correct? Then I make the last 10% split in two payments, one when work is completed and second when blue tape touch ups are completed.

Is that reasonable?

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As mentioned, to be fully compliant on Chapter 53, you need to withhold 10% of payment / work completed at each payment point, Withholding 10% until the end is technically non-compliant. So if payment is for 30% of work, your actual payment will be for 27% and you hold back the 3% until the end. Make sense. Adding the lien waiver / release from subs is icing on the cake at that point.

Unfortunately, building something, especially in residential work, requires trust not just paperwork. Anyone can sign paperwork and agree to do work or agree to pay for the work. It all comes down to the 2 parties knowing and trusting each other to hold up their end of the bargain. No one wins when one or the other defaults. The homeowner really doesn't win because they are left literally living in the mess.

I would advise you, though, to be aware that many honest people in residential construction tend to be bad business managers and although they have good intentions they underbid and get themselves into trouble. They have no intention of doing it but they end up there because they are good craftsmen but bad money managers. Always be wary of the low price for that reason. Even though you want a good deal, you don't want it so cheap that it costs in headaches down the road. You want financial peace of mind in your work, don't place that burden on someone else either especially if they are working on your own home.

About the retainage, we try not to take a job if retainage is over 5%. Of course in commercial work, that is a lot of money to wait on until a project is closed out.