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Re: Refundable or Non-Refundable Retainers

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I collect a  25 - 30% retainer with progress &/or payment in full due immediately upon completion. On cancellation I recover every minute (phone calls, contract prep, musing,  invoice, etc.)I can justify. But unless your contract explicitly says otherwise, I think you would not be legally entitled keep the retainer nor charge an arbitrary penalty( contractual ambiguities are interpreted against the drafting party). If you do choose to charge a "penalty" I would absolutely not call it that--who's to say how much time you've spent thinking about about this project ;o)
Chuck Utzman, P.E.

Cratylus Consulting Group wrote:
I would try to avoid the penalty. It is likely to upset the client.
More, consider yourself lucky to get a 40% up front retainer.
Personally, I struggle to get 10%!

Steven A.
Los Angeles

Dennis Wish wrote:

 I have a client that has paid a 40% retainer for the design of a custom home / with remodel. I received his retainer a week ago with a letter from his partner agreeing to the terms of my work agreement although I have not as yet received the signed agreement. However, the letter was confirmation of the terms of the agreement I sent. I confirmed receipt of the retainer and started some preparatory work (ordering a Near Source and Soil Type report from the local Geotechnical for example). I also spent at least ten to twelve hours of time prior to the receipt of the retainer to discuss his design so as to identify the load paths and the method in which I would approach the design.After the first visit with the client, he concluded that he wanted me to provide engineering services. He impressed upon me that his partners who were not in the industry were concerned with my lead times and the time it would take before they could break ground. I told the client that I had two projects on my desk at the moment and based on the current work load would be able to start his project in approximately two weeks. However, I told him that I take work based on first-come-first-serve. Once I receive his retainer and signed agreement, I would place his project in the schedule.It was implied that by accepting his retainer I was placing him within a queue and would refuse any other work that would interfere with starting and completing his project in the order in which I received work. The only exceptions to this are; plan check corrections and in-field construction problems that need immediate attention. After I received the retainer, I had an offer to design a 12,000 square foot one story light-framed RV storage facility. The developer wanted it done within the same time period as the job I received the retainer for and I turned the RV storage project down. I have created a network for our local engineers and to accommodate the client with the RV facility, I went online and offered the project to anyone who would want it. It was taken by one of our networked professionals.My work agreement does not indicate the return of the retainer if he should cancel the project. He paid the retainer to insure a place in my schedule and I turned down other work in the process. While I have time and expense involved I am not sure what I should do regarding the reimbursement of retainer fee's. The retainer was $3,000.00 and existing time and expense might add up to about $1,800.00. However, I believe a penalty should be charged as I turned down other work to protect his schedule. How much of a penalty is appropriate? Do you believe a retainer is inherently non-refundable?What are your thoughts. Dennis S. Wish, PE