What is the legal test for retained funds in a motor vehicle maintenance contract?

California, United States of America


The following excerpt is from FTR Int'l, Inc. v. Rio Sch. Dist., 182 Cal.Rptr.3d 865, 233 Cal.App.4th 838 (Cal. App. 2015):

The purpose of a retention is to provide security against potential mechanics liens and to insure the contractor will complete the work properly and repair defects. (Yassin v. Solis (2010) 184 Cal.App.4th 524, 534, 108 Cal.Rptr.3d 854.) The retained funds must be paid to the contractor when the security is no longer required. (Ibid. )

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