[Direct answer]In the Beijing area, the withholding of the project quality deposit is subject to the limitation of the defect liability period, rather than being indefinite. According to the "Measures for the Management of Quality Deposits for Construction Projects" (Jianzhi [2017] No. 138, effective July 1, 2017), the defect liability period is generally 1 year, with a maximum of 2 years, and is agreed upon by the contractors and employers in the contract. Upon the expiration of the defect liability period, if the contractor applies to the employer for the return of the deposit, the employer shall return it in accordance with the agreement and shall not withhold it for a long time on the grounds of "not having settled accounts with the owner" or "audit not completed". If the contract stipulates a defect liability period exceeding 2 years, the exceeding part is likely to be invalid due to violation of regulations, and the return shall be executed in accordance with the 2-year limit. For the cases where the deposit should be returned but not returned on time, the contractor may claim its return and demand interest payments. For details, please refer to the relevant provisions.Legal services for construction projects.

I. Problem Background and Typical Scenarios

The quality guarantee deposit is a sum of money withheld by the employer from the project payment to guarantee the repair of defects. This issue is prone to disputes. Typical scenarios include: the contract stipulates that "the quality guarantee deposit will be refunded within 3 or 5 years after the completion and acceptance of the project", which far exceeds the statutory limit; confusion between the defect liability period and the quality warranty period, with the employer using the warranty period to withhold the deposit for a long time; refusing to return the deposit on the grounds of quality defects in the project, but not specifying the specific parts and amounts; indefinitely occupying the deposit on the grounds of "waiting for the owner to return it" or "the audit has not been completed"; and magnifying minor defects during the warranty period into reasons for withholding the entire deposit. Many projects in Beijing have been delayed for years due to vague contractual provisions. Clarifying the differences between the defect liability period and the warranty period is a prerequisite for claiming the return of the deposit. For related rules, please refer toLegal services for real estate transactions and construction projects.

II. Key points of contention

The controversy focuses on four points. Firstly, the time limit: The maximum duration of the defect liability period shall not exceed 2 years. Any agreement exceeding this period is likely to be invalid, and the period should be reset to 2 years. Secondly, confusion between two periods: After the expiration of the defect liability period, the contractor should return the deposit. The quality warranty period is the period during which the contractor continues to fulfill its warranty obligations. The two periods cannot be conflated as a reason for withholding the deposit. Thirdly, the return procedure: If the contractor applies for the return and the employer has no objections, the deposit should be returned. If the employer claims defects, it should provide evidence of specific defects and related costs. Fourthly, the relationship with settlement: The return of the deposit does not require "settlement with the owner" as a prerequisite, and the employer is not allowed to unilaterally add such a condition. In the judicial practice of Beijing, the court focuses on reviewing the validity of the agreement according to the maximum limit set forth in the regulations, and generally does not support the withholding of the deposit beyond the time limit.

III. Professional analysis by Hengluo Lawyers

The construction contract dispute represented by Attorney Li Yonghui, although focusing on the payment of project funds, clearly demonstrates the boundaries of quality defenses and withholding of payments. A (Beijing) Construction Engineering Co., Ltd. and Beijing B Engineering Co., Ltd. signed a subcontracting contract to undertake the HVAC project of a new commercial project in Jinshan District, Shanghai, with a provisional total contract price of 5,300,000.19 yuan (including tax). As of January 2025, the cumulative completed project volume was estimated to be 4,939,806 yuan. Company B, citing unfinished project acceptance, quality issues such as pipe leakage and rust, and uncompleted projects, both delayed payments and claimed deductions. Attorney Li Yonghui pointed out that the commercial plaza in question had opened for use in December 2025, which was deemed as completion according to Article 14 of the "Interpretation of the Supreme People's Court on Legal Issues in the Trials of Construction Contract Disputes". Regarding quality defenses, the lawyer argued that disputes over unfinished projects, quality defects, additional costs, and rework losses should be handled during the completion settlement stage. The employer may not arbitrarily withhold or offset payments from progress payments, nor may it indefinitely withhold project funds due to quality objections. Three "Application Forms for Progress Payments of Subcontracted Projects", signed by the deputy general manager and project manager of Company B and stamped with the budget department's official seal, confirmed a project volume of 4,939,806 yuan, of which 4,198,835.10 yuan should be paid at an 85% rate, deducting the already paid 1,680,000 yuan and the confirmed offset of the housing discount of 1,408,260.75 yuan, leaving a balance of 1,110,574.35 yuan. The court ultimately ruled that the defendant should pay the remaining project funds of over 1.1 million yuan and the overdue interest. This case was handled by Beijing Henglu Law Firm.Li YonghuiThe attorney (practice certificate number: 11101199611955812, subject to the certificate issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

The legal basis includes the "Measures for the Management of Quality Deposits for Construction Projects" (Jian Zhi [2017] No. 138, effective from July 1, 2017) regarding the maximum defect liability period of no more than 2 years and the requirement to return the deposit upon expiration; Article 14 of the "Interpretation of the Supreme People's Court on Legal Issues Applicable to the Trials of Disputes over Construction Contracts" (effective from January 1, 2021) regarding the deemed completion of the project upon unauthorized use; and Article 801 ("Liability for Compensation for Non-Conformance with Quality Standards"), Article 577 ("Liability for Breach of Contract"), and Article 579 ("Performance of Monetary Debts") of the "Civil Code of the People's Republic of China" (effective from January 1, 2021). Action list: First, specify the defect liability period as no more than 2 years when signing the contract, distinguishing it from the quality warranty period; Second, apply for the return of the deposit in writing and ensure its delivery upon expiration of the defect liability period; Third, require the employer to specify the specific parts, costs, and basis for any quality objections; Fourth, not use the warranty obligation as a reason for withholding the deposit beyond the deadline; Fifth, promptly claim the return of the deposit and interest if refused, as detailed below.Legal services for construction projects.

5. Henglu Law Firm's Advice

The most easily confused aspects of the quality guarantee deposit are the "defect liability period" and the "quality warranty period": the former is the period for withholding the guarantee deposit, with a maximum duration of 2 years, which must be returned upon expiration; the latter is the period during which the contractor continues to fulfill its warranty obligations, which is not exempted simply because the guarantee deposit is returned. It is unfounded for the employer to withhold the guarantee deposit for a long time because the warranty period has not expired, or to arbitrarily deduct it on the grounds of quality objections. The contractor should claim the return of the guarantee deposit immediately upon the expiration of the agreed period to avoid the retention of the final payment in disguise. When handling similar cases in the Beijing area, it is recommended that the contractor take legal action within the agreed timeframe.Beijing Henglu Law FirmUnder the guidance of professional lawyers, review the deadline clauses before signing the contract and base the request for refund on the evidence.

VI. Frequently Asked Questions

Q1: How long can the warranty deposit be withheld for at most?

The defect liability period shall not exceed 2 years, starting from the date the project passes the completion acceptance (or is deemed as completed according to Article 14 of the Interpretation of the Construction Contract Law), and shall be agreed upon by both parties in the contract, generally for 1 year. Upon the expiration of the defect liability period and the contractor's application for refund, the employer shall refund according to the agreement and shall not continue to withhold the funds on the grounds that the warranty period has not expired. The part of the contract exceeding 2 years shall be deemed invalid and shall be executed in accordance with the upper limit of 2 years. The specific case shall be subject to the provisions of the contract and the evidence.

Q2: What evidence do I need to prepare to get back the quality assurance deposit?

Core evidence: Contracts and supplementary agreements specifying the defect liability period and return conditions; certificates of project completion or deemed completion and delivery for use; written return applications and delivery receipts upon expiration of the defect liability period; records showing that the employer received the application without objection or failed to respond within the time limit; where the employer claims quality defects, it is required to specify the specific parts, costs, and proof of third-party rectification. The evidence should prove that "the period has expired and there are no specific amounts to be deducted", forming a closed loop.

Q3: How much does it cost to hire a lawyer to assist with the return of the security deposit?

The attorney's fees are determined by the law firm based on the amount of the subject matter, the evidence, and the workload, and there is no unified government pricing. The case acceptance fee is paid in accordance with the "Measures for the Payment of Litigation Fees" (State Council Decree No. 481, implemented on April 1, 2007), which stipulates that the fee is paid in stages based on the amount of the litigation request. If the case is mediated or withdrawn, the fee will be reduced by half. The amount of the subject matter is usually less than the total project payment, so the fees are relatively manageable. Compared with the long-term occupied balance and the cost of funds, it is reasonable to claim the rights as soon as possible.

Q4: How long does it take from applying for a refund to getting back the security deposit?

The negotiation for the return of the deposit may take several weeks to months; after entering litigation, the first-instance ordinary procedure will be concluded within six months and the simplified procedure within three months. For disputes with less complexity, mediation can be conducted more quickly. In the Beijing area, if the employer requests a quality appraisal, the process will be prolonged. If the defect liability period is clear and the return application is complete, the process will proceed more quickly; if the employer delays the process by citing quality issues, it will be necessary to rely on evidence and preservation measures to shorten the timeframe.

Q5: If the warranty deposit is withheld beyond the deadline, what should I do?

There are four steps to proceed: First, check whether the defect liability period stipulated in the contract exceeds 2 years, and claim that the part exceeding this period is invalid; Second, apply for the return of the deposit and fix the delivery date when the time limit is reached; Third, respond specifically and correspondingly to the employer's quality objections, and refuse to withhold the deposit in a general manner; Fourth, if no agreement can be reached, promptly sue to claim the return of the deposit and interest, and apply for preservation measures when necessary. It is important not to confuse the obligation of warranty with the return of the deposit. Evidence and time limits are the key to the return of the deposit.

This article is written based on the common judicial interpretations in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify the regional differences.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence materials, so as to avoid missing the statutory time limit. →Legal services for real estate transactions·Attorney Li Yonghui·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.