Retainage Ordered Released Even Without Substantial Completion?
Kegler Brown Construction Newsletter December 1, 2004
An Ohio appellate court on August 6, 2004 has ruled that a contractor should be paid his retainage due to the owner's delay in ultimately allowing the work to be completed. (Stone Excavating, Inc. v. Newmark Homes, Inc.) In that case, the owner suspended the last phase of asphalt work for several years. Although the contract did not contain a specific contract completion date, the court implied a reasonable period of time and concluded that the owner breached the contract by failing to allow the contractor to complete within a two (2) year period.
The Court therefore found that the retainage was due the contractor, even though the owner had used those funds to pay another contractor to finish the work four years after the project started.
Contractors may be able to use this case to argue for release of retainage when the work is delayed or suspended by the owner for a considerable period of time.