What does "retainage" refer to in a home improvement contract?

Retainage refers to a portion of the payment that is withheld from the contractor until a home improvement project is completed satisfactorily. This practice serves as a financial incentive for the contractor to finish the work according to the agreed terms and conditions. It ensures that the contractor has a reason to maintain quality and address any potential deficiencies before receiving full payment. Retainage is commonly used in various construction and home improvement contracts to protect the homeowner's investment, ensuring that all aspects of the project meet established standards.

The other options describe concepts that do not accurately reflect the purpose or definition of retainage in this context. For instance, a guarantee of full payment regardless of project status does not address the withholding practice relevant to retainage. Additional charges added after project completion and discounts offered for early payment are unrelated to the retention of funds as a means of ensuring proper project completion.