CSLB Contractor's Law & Business Practice Exam

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In construction contracts, retention may be held as a guarantee for how many days to ensure payment to subcontractors and suppliers?

30 days
60 days
90 days
120 days

The correct answer is: 60 days

In construction contracts, retention refers to a portion of the payment that is withheld until the completion of a project to ensure that subcontractors and suppliers are paid appropriately. The duration for which retention might be held can vary by jurisdiction and the specific terms laid out in the contract. In many situations, a common practice is to hold retention for a period of 60 days after the completion of the work or the final acceptance of the project. This period allows the contractor to ensure that all work has been completed to satisfaction and that there are no outstanding claims or issues needing resolution before the final payment is made. By holding retention for 60 days, the project owners provide a timeframe to address any potential liens or disputes, ultimately ensuring that all parties are compensated fairly and that any final punch list items can be resolved without financial strain on subcontractors or suppliers.