How do we close out an HOA construction project and release retainage?

By OurHOA · General information · Revised September 27, 2026

How an HOA board closes out a construction project: substantial vs final completion, the punch list, closeout papers, releasing retainage, and a warranty calendar.

Part of the HOA board handbook: vendors, projects and upkeep.

The short answer

A construction job has two finish lines, and boards get into trouble when they treat them as one. Substantial completion is the day the roof or clubhouse can be used. Final completion is the day the punch list is done, the permit is closed, the paperwork is filed and every sub is paid. Retainage, the slice of each payment the association held back, belongs to the second date. The board's closeout job, in order: record the substantial completion date, issue a punch list, collect the closeout package, release retainage once the lien paperwork is clean, and calendar every warranty deadline. State law and your contract control the details, and both vary. This guide is general education, not legal advice, and on a large job the association's attorney should read the final payment documents before the check goes out.

Pin down substantial completion in writing

The substantial completion date starts legal clocks. In Texas, section 16.009 of the Civil Practice and Remedies Code generally bars suits over defective construction brought more than 10 years after substantial completion, or six years for some houses and townhouses when the contractor gave a qualifying written warranty. In Colorado, section 13-80-104 gives two years from when the defect shows itself, with an outer limit of six years after substantial completion, stretched by up to two years for a defect that surfaces in year five or six. In Florida, section 95.11(3)(b) runs four years to sue, and seven at the outside, from the certificate of occupancy or completion, though the four years runs from discovery for a hidden defect, and warranty repairs don't restart the clock. When the contractor says the work is ready, have your engineer or architect inspect it and sign a one-page certificate stating the substantial completion date, with the punch list attached. Without a consultant, the board president and the contractor sign it. In Florida, get a copy of the building department's certificate as soon as it issues. Warranty forms often start on one of these dates too, so check which date each warranty uses before you sign.

Walk the job and write a punch list the contractor can close

Schedule one walk with the contractor's superintendent, your consultant and the board member who has been the project contact. Bring the specifications, the approved change orders and a camera. Write each item so a stranger could check it off: 'Building C, east elevation: two cracked shingles above unit 12, replace' works. 'Roof: touch-ups' does not. Number the items, attach photos, and send the list within two business days with a completion date, such as 30 days out. The contractor marks each item done, then you re-walk only the listed items. Owner complaints go on it only if they tie to the contract, like a gouged driveway or sod that died under the dumpster, logged with the unit number and a photo.

Collect the closeout package before the last check

The next board will need these papers in 10 years, when a leak shows up and no one remembers who did the work. Require them in the contract as part of final completion: - Final inspection or permit sign-off from the building department, and the certificate of occupancy or completion where one is issued - Manufacturer warranties registered in the association's name, with the registration confirmation - The contractor's workmanship warranty, signed, with the start date and length - As-built drawings or marked-up plans showing what changed in the field - Product data sheets, colors, model numbers and spare material left on site, with where it is stored - Operation and maintenance manuals, plus any service schedule the warranty requires - Subcontractor and major supplier contacts - Final lien waivers, and in Florida the contractor's final payment affidavit - A final accounting: original contract, every change order, credits and the retainage balance Scan it all into the association's records the week it arrives. A warranty that lives in a former director's email is a warranty the association doesn't have.

Releasing retainage without buying a lien

Retainage keeps the contractor working the punch list, and it is the money that pays a sub the general contractor stiffed. Release it early and you lose both. In Texas, section 53.101 of the Property Code requires the owner to hold back 10 percent of the contract price during the work and for 30 days after the work is completed, whatever your contract says. If the association doesn't, section 53.105 gives claimants who followed the notice rules a lien on the property of at least the amount that should have been reserved. A claimant who wants a lien on those reserved funds must file its lien affidavit within 30 days after completion under section 53.103. Recording an affidavit of completion under section 53.106 puts that date on the record. File it within 10 days of completion, because a later filing makes the filing date the completion date. Chapter 53 counts completion from when the contract work, change orders included, is actually done, so count from the finished punch list, not the day the crew left. In Florida, don't make the final payment until the contractor delivers the final payment affidavit required by section 713.06(3)(d), listing any lienor who served a notice to owner and whether it was paid. After everyone is paid, section 713.132 lets the owner record a notice of termination that ends the notice of commencement 30 days after recording. In Colorado, follow the retainage percentage and release terms in your contract, and have the association's attorney confirm the lien deadlines before the final check. Whatever the state, trade the final check for unconditional final lien waivers from the contractor and every sub and supplier on your notice log. Our guide on what to do when a contractor files a lien on HOA common area covers the waiver forms and deadlines.

Build the warranty calendar

Calendar every warranty with its start, its end and a reminder 60 days before the end. Assign each to a board position, not a person, so the reminder survives an election. The most useful single inspection is the one about 11 months after substantial completion. If the workmanship warranty runs one year, this walk catches failures while the contractor still owes the repair. Have the consultant look hardest at flashing, sealant joints and drainage. If a defect shows up, send the contractor written notice right away. Some states require a formal notice before any lawsuit. Florida's chapter 558 requires a notice of claim at least 120 days before suing when the claimant is an association representing more than 20 parcels, and gives the contractor 50 days to inspect and 75 days to respond. Colorado's section 13-20-803.5 requires notice 75 days before filing, or 90 days for commercial property. Colorado boards should also know that HB25-1272, effective August 6, 2025, raised the owner vote needed before most construction defect suits to 65 percent of the association's votes, but section 38-33.3-303.5 does not require that vote when the association itself was the contracting party. In Texas, a written claim presented to the contractor within the section 16.009 period extends the deadline by two years.

A sample closeout timeline

Day 0: consultant inspects and signs the substantial completion certificate with the punch list attached. Day 2: punch list goes out with a 30-day completion date. Owner notice goes out. Days 2 to 30: contractor works the list, assembles the closeout package and schedules the final inspection. Day 30: re-walk of listed items only. Permit sign-off in hand. Call this the completion date. By day 40 in Texas: affidavit of completion recorded, if the board files one, with copies sent as section 53.106 requires. Days 30 to 45: final waivers and, in Florida, the final payment affidavit arrive. Day 60 or later in Texas, or once the paperwork is complete elsewhere: board votes at a noticed meeting to release retainage, and the check goes out. Texas requires the 10 percent hold for 30 days after completion. Month 11: warranty walk. Year 5: calendar reminder to review your state's repose deadline with the association's attorney. Send the final cost and completion date to your reserve study provider so the component resets. Our guide on how to plan a major HOA project covers the earlier stages of the job.

Wording the board can use

A motion to release retainage can read: "Move to approve final payment to [contractor] of $[amount], consisting of the retainage balance of $[amount] under the [project] contract dated [date], on the condition that the treasurer has received (1) the consultant's written confirmation that all punch list items are complete, (2) the final inspection or permit sign-off, (3) unconditional final lien waivers from the contractor and each subcontractor and supplier on the association's notice log, and (4) the closeout documents listed in section [number] of the contract." A closeout notice to owners can read: "The [project] is substantially complete as of [date]. Over the next 30 days the contractor will finish a list of remaining items, including [two or three examples]. If the project damaged your property and you have not reported it, send a photo and your address to [contact] by [date]. Warranty problems can still be reported after that."

Mistakes boards make at the end of a job

Paying the retainage the day the crew leaves because the board is tired. The punch list then stalls for months. Letting the substantial completion date go unrecorded, then arguing years later about when a limitation period started. Accepting a manufacturer warranty that was never registered, or registered in the contractor's name. Skipping the 11-month walk and finding the flashing failure in month 14.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

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