Progress Payments and Retention in Condominium Works

In condominium works of some size, payment to the firm is not made in a single instalment but by progress states, the so-called SAL. At each completed phase the works supervisor certifies the works carried out and the condominium pays the corresponding instalment, but withholds a retention, usually between five and ten per cent, released at testing. This mechanism ties payments to actual progress and protects the client against defects and non-performance.

What progress states are

A progress state is the document measuring, at a given date, the share of the work carried out against the contractual total. The works supervisor records the works done, compares them with the bill of quantities and determines the amount accrued. On this basis the payment certificate is issued and the instalment is paid to the firm. Progress states are provisional by nature: the resulting payments do not amount to definitive acceptance of the work, which remains subject to the testing outcome.

Why paying by progress states is advantageous

Payment by progress states benefits both parties. For the firm it ensures a cash flow proportionate to the work done, without having to advance the whole cost. For the condominium it avoids paying large sums before the work is carried out and links the money to the real progress of the site. It also allows the special fund to be built up gradually, in relation to the individual payments due, as Article 1135 permits when the contract provides for it.

The retention

The retention is a share the client withholds on each progress state, set aside as protection against execution defects and non-performance by the contractor. The standard percentage ranges between five and ten per cent of each progress state, unless the contract provides otherwise. It is not a failure to pay, but a temporary set-aside: the amount remains owed to the firm and is released once correct execution is verified.

• Percentage withheld on each progress state, typically five to ten per cent
• Guarantee function against defects and non-performance by the contractor
• Amount set aside, not deducted, still owed to the firm
• Release provided at testing or the final check
• Coordination with the delay penalties set in the contract

Release at testing

The retention is released when the work is tested or otherwise verified as correctly executed. This is the moment the condominium, having confirmed conformity, settles the withheld amount. If testing reveals defects or non-conformities, the retention allows the necessary sums to be held back to address them, without having to go to court to recover money already paid. This is why it is essential that the contract sets out clearly the timing and conditions of release, anchoring it to testing and not to mere completion.

Accounting for progress states

Accounting for the works requires tracking, for each progress state, the amount accrued, the instalment paid, the retention withheld and the remainder. The picture must reconcile with the contractual total and with the special fund set up. At the end of the work the sum of payments plus retentions released must match the amount due, save for approved variations. Orderly recording makes the statement for the intervention transparent and verifiable by owners at the meeting.

Mistakes to avoid

The most common mistakes are paying progress states without the works supervisor's certification, providing for no retention in the contract, releasing it before testing and confusing provisional payments with acceptance of the work. Another mistake is failing to coordinate the progress-state deadlines with the collection of provision from owners, risking the need to advance money. Settling everything in the contract and the payment plan prevents these issues.

Recording progress states, calculating the retention and monitoring its release at testing is immediate with software that links each payment to site progress and to the special fund. With AmministraPro the manager handles progress states, retentions and the statement for the work in a single file: the tools are described on the features page and the plans on the pricing page.