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Roger, Attorney
Category: Business Law
Satisfied Customers: 31692
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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I am a contractor in Hawaii. Most of my work is sub-contracting.

Resolved Question:

I am a contractor in Hawaii. Most of my work is sub-contracting. We are the 1st ones on the job. Then the prime contractor and other sub's start on their work. I may be years before the job is completed and our 5% retainage is held up till everyone else gets finished. It has been appearant the some Construction Managment firms will delay the completion in order to continue charging the owner billable hours. This further compunds the problem.

Is there a law which will allow "me" (the 1st to do my work sub-contractor) to get paid the retention with in a reasonable period of time. Retention Bonds....etc

Chuck Higbee
Submitted: 5 years ago.
Category: Business Law
Expert:  Roger replied 5 years ago.
Hi - my name is XXXXX XXXXX I'm a Business litigation attorney here to assist you.

The retention money should be the money owed to the contractor by the owner of the project. That has nothing to do with you as a sub. Your contract is between your company and the general. Thus, when and how you get paid is up to the terms of your sub-contract. If the subcontract says that you'll be paid out of the retainage or that you won't be paid until the project is totally complete, you would be stuck with that.

Much of my practice is dedicated to construction litigation, and most subcontracts I've seen pays the sub upon completion of its work - and not the completion of the project.

I would recommend that you have an attorney review your contract to see what the terms are, and in the future, you should consider making sure that your contract doesn't require you to wait on the retainage to the general contractor before you are paid.

I have never seen a bond for retainage, and I don't kow that this would help because calling the bond only happens if there's a default. So if there's not a default in payment, there'd be no bond coverage.

The best thing you can do is have your contract state that you goat paid in full when you compete you work.
Customer: replied 5 years ago.
I have seen bonding for retainage on the internet. I have been counciled by the head of Design & Construction for the City & County of Honolulu to get this bonding. I am less than impressed by your response. When sub's do work that is much smaller in magnatude and early in a project we become the bank giving out loans to the customer because we have to by law pay our laborers and suppliers. I think this is a waiste of time. I guess I just learned a $ 43.00 lesson. Don't use business law.
Expert:  Roger replied 5 years ago.
I have a large practice in construction litigation, and I've never seen a bond for retainage in the sense that you're referring to. A bond is only good to pay out if there's a default. Thus, it would do you no good to have a bond for retainage if you get paid eventually as the contract specifies. The only time a bond would be relevant is if you are not paid as agreed by the contract. Thus, the problem is your contract terms - and I don't see the bond as a solution. The solution is to have your subcontract state that you are to be paid in full when you complete your work. If you don't get paid as agreed, you can call the general contractor's payment bond for the money due, or if there's no bond (usually on non-government jobs), you can issue a stop payment notice. Let me know if you have any other questions.
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