Working-capital release
Retention bonds
An alternative to cash retention, supporting the contractor's obligations while allowing certified funds to be released.
Submit this type of riskConstruction contracts often allow the employer to retain a percentage of certified payments until completion and then retain a smaller balance through the defects period. A retention bond can replace some or all of that cash security, improving contractor liquidity while preserving an agreed remedy for the employer.
The risk depends on release conditions, certification, defects obligations and the relationship with any performance or maintenance bond. Titanium considers the contractor's completion position, outstanding works and defects profile before supporting release.
Typical uses
Where it can apply.
- Release of construction contract retention
- Phased completion and sectional handover
- Defects liability periods
- Main contractor and subcontractor arrangements
Underwriting focus
What drives the decision.
- Certified value, completion status and outstanding works
- Defects history, handover requirements and remedy periods
- Reduction and release mechanics
- Interaction with performance, maintenance and parent guarantees
Initial submission
Information that moves the review forward.
A complete pack reduces assumptions and allows legal structure, wording and credit to be considered together.
- 01
Contract retention clause and proposed wording
- 02
Latest payment certificate and retention statement
- 03
Programme, completion evidence and defects list
- 04
Financial statements and current management accounts
- 05
Details of related bonds and guarantees
- 06
Required amount, release milestones and expiry
Important considerations
Structure remains case specific.
- Bond exposure should track the cash retention being released.
- Late-stage project issues can be more important than historic accounts.
- Expiry should align with objective certification or a clear long-stop date.
Common questions
Clear answers before submission.
How does a retention bond help cash flow?
It may allow money otherwise withheld from interim payments to be released, while the beneficiary receives bond security for the agreed retention obligation.
Is a retention bond automatically released at practical completion?
Not necessarily. Release depends on the wording and the underlying contract, and may extend through a defects or maintenance period.
Discuss an opportunity
Discuss a retention bonds opportunity.
Our review starts with the underlying obligation, the applicant and the legally compliant route to issuance.
Submit a risk