Retention Bond

 

A guarantee issued in place of money that would otherwise be held as retention. Type of performance bond that protects the customer after a job or project is finished. It guarantees that the contractor will carry out all necessary work to correct structural and/or other defects discovered immediately after completion of the contract, even if full payment has been made to the contractor.

Retention is a percentage (often between 2.5% and 5%) of the amount certified as due to the contractor on an interim certificate that is retained by the client.

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