The retainage for subcontractors is provided for in the subcontract agreement with the general contractor. Generally, the subcontractor will not receive the funds held as retainage until after the general contractor has received its retainage from the owner. As the subcontractors are usually the last to be paid, they bear the brunt of any hardship due to a delay in receiving the retainage funds. At the end of the construction project, payment to the general contractor can often be delayed until well after the project has been substantially completed. Despite the end of the subcontractor's work, it must still wait for distribution of the retainage funds from the owner to the general contractor.

Though the seeming unfairness of this system has been challenged by subcontractors, many courts have upheld the contingency system as valid. Essentially, the courts have found that contingency clauses are enforceable so long as the subcontract agreement clearly provides that the timing of payment to the subcontractor hinges on the timing of payment to the general contractor or that the subcontractor bears the ultimate risk of the owner's delayed payment or insolvency. The clarity of the contract language is critical to the successful administration of the contingency clause.

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