Legal Question in Construction Law in California

Unless the client is paying the suppliers/subcontractors directly, that is absolutely not correct. Your conditional release should reflect the amount billed. If you are paid less than billed, only then would you issue an unconditional release in the amount paid. Your client is just mixed up. It is contrary to their interests to be charged one amount by you, and to pay it to you, but only be released to the extent of the part of the payment you keep. That's totally backward.