Defects Liability Period and Retention Money in Singapore: DLP, Maintenance Period, Final Account and Late Defects

Every construction contract ends twice. The first ending is practical completion, when the owner takes the space back and starts using it. The second ending comes months later, when the defects liability period (DLP) expires, the last of the retention money is released, and the final account is signed off. Most disputes about defects and money happen in the gap between those two dates, usually because nobody wrote down what was supposed to happen in it.

This guide explains how the DLP works under the main Singapore contract forms, how retention money is held and released, what the final account is, and what happens when a defect shows up after the DLP has ended. It is written for owners, managing agents, facility managers and fit-out managers, and for contractors who want their retention back on time. The rules on limitation periods are taken directly from the Limitation Act 1959; the contract mechanics come from the Public Sector Standard Conditions of Contract (PSSCOC) 2020 and from Singapore court decisions on Singapore Institute of Architects (SIA) contracts.

A note on scope: if you bought a new home from a developer, the DLP comes from the prescribed Sale and Purchase Agreement, not from a building contract. That regime is covered in the companion guide on defects in a newly completed property.

What the defects liability period is, and what it is not

The DLP is a fixed period after completion during which the contractor must come back and make good defects that appear, at its own cost. Different forms use different names:

• The PSSCOC (the government’s standard conditions, 8th edition July 2020) uses “Defects Liability Period” and defines it by reference to the Appendix, where the length is filled in for each contract.²
• The SIA building contract uses “Maintenance Period”. In Eltraco International v CGH Development, the Court of Appeal described an SIA contract whose clause 27 provided a 12-month maintenance period, extendable by 6 months for certain recurring defects.⁴
• The prescribed developer Sale and Purchase Agreement for strata homes uses a 12-month “defects liability period”.¹⁰

Under the PSSCOC, the contractor must complete outstanding work and carry out “amendment, reconstruction and remedying defects” that the Superintending Officer instructs during the DLP or within 14 days after it expires (cl 18.1).² That 14-day tail matters: a defect inspected on the last day of the DLP can still be instructed shortly afterwards.

Two things the DLP does

1. It obliges the contractor to return. The contractor must fix notified defects at its own cost if they result from defective work, from its design (where it designed), or from any other breach (PSSCOC cl 18.2).²
2. It gives the contractor a right to fix its own work. The owner normally cannot ignore the contractor, appoint someone else and send the bill without first giving the contractor the notice and opportunity the contract requires.

One thing it does not do

The DLP is not normally a cap on liability. The PSSCOC says so expressly in clause 18.5.

The practical lesson from Thio runs in both directions. Owners keep their right to damages after the DLP, but an owner who shuts the contractor out of rectification during the DLP may find the recoverable amount reduced.

When the DLP starts

The DLP normally starts on the completion date certified under the contract.

Two practical points follow.

Sectional completion. The PSSCOC allows substantial completion to be certified for a phase or part of the works, including parts the employer occupies early (cl 17.3).² Each part can then have its own DLP, and the PSSCOC’s final certificate waits for the latest of them (cl 34.1). On a staged office fit-out, write down which areas were handed over on which date.

Outstanding works. Completion is rarely perfect. Under the PSSCOC, the contractor applying for completion gives an undertaking to finish outstanding work during the DLP (cl 17.1).² In the SIA mechanism discussed in Ser Kim Koi v GTMS Construction, the architect may hold back a reasonable sum to cover the cost of outstanding work when releasing retention at completion.³ Either way, the outstanding-works list should be agreed in writing at handover.

In Ser Kim Koi, the Court of Appeal held that a Completion Certificate not issued in accordance with the contract lacked the effect the contract gave it, which affected the maintenance period dates and the liquidated damages position.³ Completion certificates are not formalities.

Retention money: how it works

Retention money (retention monies, retention sum) is a percentage of each progress payment that the owner keeps back as security for completion and defects. It is the contractor’s money, earned for work already done, held back until conditions are met.

SIA-type retention mechanics

Singapore court decisions on SIA-form contracts describe a consistent pattern, with the actual figures filled into the contract’s Appendix:

• In Hsing Mei Construction v Lim Check Meng [2000] SGHC 75, interim payments were made at 90% of the gross certified value, so 10% of each certificate was retained, with the total retention limited to 5%. Half of the retention not yet paid was to be certified on completion, and the balance at the expiry of the Maintenance Period.⁵
• In Eltraco International v CGH Development [2000] SGCA 51, a 1990 SIA contract allowed the employer to retain up to 5% of the contract sum; half was to be released on the completion certificate.⁴
• In Ser Kim Koi v GTMS Construction [2016] SGCA 7, on the 9th edition (2010) SIA conditions, clause 31(9) required one-half of the retention not yet paid to be certified as due on completion, less a reasonable sum for outstanding work.³

These are examples from specific contracts, not a statutory rate. Nothing in Singapore law fixes the retention percentage for private works; the contract does.

PSSCOC 2020: a security deposit instead of retention

The public-sector form works differently. PSSCOC 2020 has no standing retention on progress payments. Instead, within 14 days of the Letter of Acceptance (or a longer period in the Appendix), the contractor provides a security deposit of the amount stated in the Appendix, in cash or as a guarantee (cl 4.5). The employer can use it to make good loss from the contractor’s breach, including liquidated damages, and returns the unused balance without interest when the Final Completion Certificate is issued.²

The PSSCOC does keep a targeted retention power: if the contractor fails to submit an adequate programme, the Superintending Officer may certify that 10% of interim payments be retained until the programme is in order (cl 9.4).²

Illustrative example: how retention builds up

The table below uses SIA-type mechanics: 10% of each certified amount retained until retention reaches 5% of the contract sum. Illustrative figures for a S$200,000 fit-out; your contract’s percentages may differ.

The cap is why retention on a well-run project is usually a modest sum by completion. It is also why the second half matters to the contractor: on a small job, the last few thousand dollars can be most of the profit.

Release at completion and at the end of the DLP

When the owner can keep retention

Retention is security, not a bonus. The owner can apply it against the cost of defects the contractor fails to fix after proper notice, and against other sums due under the contract. The PSSCOC illustrates the tools an owner can use:

• If the contractor fails to comply with an instruction within 14 days, the employer may employ and pay others to do the work and recover the cost (cl 2.6).²
• If urgent remedial work is needed during the DLP and the contractor cannot or will not do it at once, the Superintending Officer may have someone else do it (cl 2.7).²
• If a defect is impracticable or inconvenient to fix, the Superintending Officer may instead assess the diminution in value of the works, which is recoverable from the contractor (cl 18.3).²

Holding the whole retention indefinitely because “there might be more defects” is not one of those tools. If the contract gives a release date and the conditions are met, the money is due.

Retention, payment claims and SOPA

The Building and Construction Industry Security of Payment Act 2004 (SOPA) applies to written construction contracts, but not to contracts for work on residential property that does not require approval from the Commissioner of Building Control (s 4(2)(a)).⁹ Where SOPA applies, the statutory payment-claim and payment-response timetable governs, and a respondent who withholds money must give reasons in a payment response. The PSSCOC builds this in: its final payment claim is expressly treated as a payment claim under the Act (cl 32.4(3)).² Whether, when and how a retention release can be claimed depends on the contract and on how the claim is framed. Read the SOPA guide before serving or answering a claim that includes retention. If adjudication follows, the Singapore Mediation Centre’s application fee is S$654 including GST under its fee schedule from 1 August 2025.¹²

The final account

The final account settles what the contract is finally worth: the original contract sum adjusted for variations, remeasured quantities, provisional sums, loss and expense claims, and deductions such as liquidated damages. It is where disputes about variation orders and provisional sums and liquidated damages and extensions of time are finally priced.

The PSSCOC sets out a full timetable, which is a useful model even for private contracts:

Source for the whole table: PSSCOC 2020, clause 32.²

Three features deserve attention:

• Claims not substantiated in time can be lost. Under clause 32.4(2), failing to substantiate a claim for an event before substantial completion bars the contractor from advancing it, subject to limited exceptions.²
• Silence is acceptance. Amounts the contractor does not dispute within 30 days are deemed accepted and binding (cl 32.5(4)).²
• The final account does not end defects liability. Issuing a Final Account Certificate before the Final Completion Certificate does not relieve the contractor of its DLP obligations (cl 32.5(9)), and no certificate is by itself conclusive that the work complies (cl 34.2).²

Under the SIA conditions, the Court of Appeal noted that the Completion Certificate also triggers the contractor’s obligation to submit its final accounts documents under clause 31(11).³ On small private jobs there is often no formal final account at all, only a “final invoice”. That is where disputes start: the contractor’s last invoice adds variations the owner never priced, and the owner deducts defects the contractor never saw.

Defects that appear after the DLP

The end of the DLP changes the procedure, not necessarily the liability. After it expires, the contractor is no longer obliged to return under the defects clause, and the owner can no longer insist on rectification in kind under that clause. But a defect that results from a breach of contract or negligence can still found a claim for damages, as Thio and PSSCOC clause 18.5 show.⁶² BCA makes the parallel point for new homes: a defect reported during the DLP stays the developer’s responsibility even if it is still unresolved when the period ends.¹¹

The real constraint is time.

Limitation periods under the Limitation Act 1959

Source: Limitation Act 1959, current version on Singapore Statutes Online.¹ Section 24A(3) took its current wording on 1 April 2022.¹

How these interact in a defects case:

• Contract claims against the contractor are measured from when the cause of action accrued. As a general principle, a contractual cause of action accrues on breach rather than on discovery, so time can start running before anyone sees the defect. Take legal advice on the accrual date in your case.
• Negligence claims accrue when damage occurs. For construction defects, the Appellate Division in MCST Plan No 4099 v KTP Consultants [2024] SGHC(A) 32 described this as the point when defects manifest as physical damage to the building.⁷
• The knowledge limb gives 3 years from when the claimant knew, or could reasonably have found out with expert advice it would be reasonable to seek, that the damage was attributable to the defendant’s act or omission and who the defendant was. The required knowledge is “reasonable rather than absolute or certain”.⁷⁸ In KTP, the court refused to strike out the MCST’s claim because it was arguable that the MCST learned of the engineer’s role only from a later expert report.⁷
• The long-stop in s 24B is absolute for negligence claims: 15 years from the last negligent act or omission, regardless of discovery.¹

The scenario shows why the DLP is a starting point and not the whole protection. A written specification, photographs of concealed work before it was covered, a test record (for example a ponding test) and a product warranty in the owner’s name would each have changed the outcome. See façade and water-leak diagnosis for how leaks are traced, and protecting yourself if your contractor goes bust for security beyond retention.

Practical tips for small A&A and fit-out contracts

Small addition and alteration (A&A) works and office or retail fit-outs are often done on a two-page quotation. That is where DLP and retention terms are most often missing. The fixes are cheap if made before signing.

For contractors: getting the retention back

• Ask for the completion certificate or signed handover in writing; it starts the DLP and, under SIA-type terms, the first retention release.³
• Respond to every defect notice in writing, with an attendance date. Silence is the most common reason owners hold retention.
• Book the end-of-DLP inspection yourself, and send the closed-out defects list with photographs.
• Submit the final account on time and with substantiation; under PSSCOC-style terms, late or unsubstantiated claims can be barred.²
• If retention is acknowledged in writing as owing but unpaid, note that a written acknowledgment or part payment of a debt restarts the limitation clock (Limitation Act s 26(2)).¹

Choosing protection that fits the job size

Retention is only one tool. On larger contracts, owners also use performance bonds and security deposits; on small jobs, the simplest protection is a payment schedule that never runs ahead of work done. See verifying a contractor’s licences and red flags for payment-structure guidance and the true cost of choosing the cheapest quote for how defects and delay change the real price of a bid. For commercial tenants, end-of-lease works raise the same questions in reverse; see office reinstatement.

If a defect or retention dispute cannot be settled, the options range from mediation to the Small Claims Tribunals, SOPA adjudication, the State Courts and arbitration. The renovation and construction disputes guide compares them by claim size and type.

Summary

• The DLP (SIA: maintenance period) is the period after completion in which the contractor must return to fix defects. Its length and start event come from the contract; reported SIA cases show 12 months.⁴
• Under SIA-type terms, retention is typically 10% of each certificate up to a 5% cap, half released at completion and the balance at the end of the maintenance period.⁵⁴ PSSCOC 2020 uses a security deposit instead, returned on the Final Completion Certificate.²
• The final account settles the contract sum. PSSCOC 2020 requires the draft final account within 30 days after the DLP ends and treats undisputed amounts as accepted after 30 days.²
• The DLP does not normally cap liability. Claims for later defects remain possible: 6 years in contract or tort, and in negligence the later of 6 years from damage or 3 years from knowledge, with a 15-year long-stop.¹
• For small A&A and fit-out contracts, write down the DLP, retention, notice method and final account timetable before signing, and keep the evidence for years.