Retention Rights in Practice: When to Use Them – and When Not To

The right of retention is a powerful legal tool, but one that is often misunderstood or misused. Many businesses either apply it too late or use it in situations where it does not legally hold up—leading to disputes, liability, or reputational damage.

For business owners, CFOs, and operations managers, understanding when retention rights strengthen your position and when they create risk is essential.

This article explains how retention rights work, when they apply, common pitfalls, and how to integrate them into a professional collections strategy.

1. What is the right of retention?

Retention rights allow a creditor to retain possession of another party’s property until an outstanding, related claim is paid.

Common examples include:

contractors holding access to a property
repair shops retaining vehicles
installers withholding delivery or release

Retention rights arise by law and do not require a contractual clause.

2. Legal conditions for retention rights

Retention rights are only valid if:

the claim is due and payable
the creditor has actual control over the property
there is a direct connection between claim and object
the creditor acts in good faith
the property has not yet been released

Missing one condition invalidates the right.

3. When retention rights are effective

They are particularly effective when:

the debtor urgently needs the property
continued use or delivery is critical
insolvency is imminent
litigation can be avoided through pressure

In such cases, retention rights are often a decisive leverage tool.

4. Risks and common mistakes

We frequently encounter:

attempted retention after release
unrelated claims
third-party ownership conflicts
misuse as a pressure tactic

Improper use may result in damages or court-ordered release.

5. Retention rights in insolvency situations

In insolvency, valid retention rights can:

block release to the estate
force negotiation with the trustee
secure payment or guarantees

However, trustees will challenge weak or poorly documented claims.

6. Retention rights vs. retention of title

These tools serve different purposes and are often complementary. Knowing which to apply—and when—is key.

7. Professional application within collections

Strong organisations:

assess retention rights early
document carefully
communicate legally and proportionally
combine legal pressure with negotiation

The objective is recovery, not escalation.

Unsure whether retention rights strengthen your position or create risk?

We assess, advise, and manage retention strategies as part of a complete collections approach.