2010 California Code
Civil Code
Article 2. Retention Payment

8810.  This article governs a retention payment withheld by an owner
from a direct contractor or by a direct contractor from a
subcontractor.


8812.  (a) If an owner withholds a retention from a direct
contractor, the owner shall, within 45 days after completion of the
work of improvement, pay the retention to the contractor.
   (b) If part of a work of improvement ultimately will become the
property of a public entity, the owner may condition payment of a
retention allocable to that part on acceptance of the part by the
public entity.
   (c) If there is a good faith dispute between the owner and direct
contractor as to a retention payment due, the owner may withhold from
final payment an amount not in excess of 150 percent of the disputed
amount.


8814.  (a) If a direct contractor has withheld a retention from one
or more subcontractors, the direct contractor shall, within 10 days
after receiving all or part of a retention payment, pay to each
subcontractor from whom retention has been withheld that
subcontractor's share of the payment.
   (b) If a retention received by the direct contractor is
specifically designated for a particular subcontractor, the direct
contractor shall pay the retention payment to the designated
subcontractor, if consistent with the terms of the subcontract.
   (c) If a good faith dispute exists between the direct contractor
and a subcontractor, the direct contractor may withhold from the
retention to the subcontractor an amount not in excess of 150 percent
of the estimated value of the disputed amount.



8816.  (a) If the direct contractor gives the owner, or a
subcontractor gives the direct contractor, notice that work in
dispute has been completed in accordance with the contract, the owner
or direct contractor shall within 10 days give notice advising the
notifying party of the acceptance or rejection of the disputed work.
Both notices shall comply with the requirements of Chapter 2
(commencing with Section 8100) of Title 1.
   (b) Within 10 days after acceptance of disputed work, the owner or
direct contractor shall pay the portion of the retention relating to
the disputed work.



8818.  If an owner or direct contractor does not make a retention
payment within the time required by this article:
   (a) The owner or direct contractor is liable to the person to
which payment is owed for a penalty of 2 percent per month on the
amount wrongfully withheld, in place of any interest otherwise due.
   (b) In an action for collection of the amount wrongfully withheld,
the prevailing party is entitled to costs and reasonable attorney's
fees.


8820.  It is against public policy to waive the provisions of this
article by contract.



8822.  This article does not apply to a retention payment withheld
by a lender pursuant to a construction loan agreement.