Contractor final payment.


We are closing in on the end of our addition. The contractor seems to want the last payment before the job is passed final inspection. I am uncomfortable with this fearing that they will find more profitable things to do with their time and get around to "touching up" my job when they "have time." What is the usual protocol in this matter?
Dan
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Dan Listermann wrote:

deposit when the contract is signed and the remaining 50% is NOT due until we walk through the finished job with the owner and they accept the work as complete. If something needs to be done, it is done before we expect to be paid.
Gary
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Dan Listermann wrote:

What we do on final payments is to invoice for the final payment after the final walk thru is complete. This means that there is usually a small punch list to take care of and I try to have that done before the final check is ready to pick up.
In your situation, I would probably have the contractor wait until the final walkthru for his check, or pay the final bill minus 10%, which would be paid upon final walkthru.
Above all, discuss it with him. Tell him that it is your policy to not pay everything until everything is done. He may be hurting for money. If he is, you can discuss the final minus 10% option. That way he gets some money and you still have some security.
--
Robert Allison
Rimshot, Inc.
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On Tue, 22 Mar 2005 08:24:31 -0500, "Dan Listermann"

What do you mean by "seems to want the last payment"? Does he or doesn't he? Did he ask for money -- ie. Could I pick up a cheque tomorrow?, or did he just signal completion -- We should be finished next Monday, I'll be looking for your cheque.?
And -- here's a familiar refrain -- what does your contract say?
For a job such as an addition, it is most usual for the contract to contain a holdback -- ie the final 15% due 45 days after completion -- this is to ensure that no subs have acquired rights to a lien on the property for non-payment; it is not unusual for a contract to specify final payment on completion -- completion is defined as ..well, as just that -- deficiencies remedied, everybody happy, everybody paid.
How you deal with it depends on your relationship with him -- and your own honesty.
I've had clients pay before touch ups were done -- they were going to be away and didn't want to make me wait a month for my money (the touchups were minor and the money was major). I've also had people try to beat me down to a reduced payment (I won't pay you the ten thousand I owe .. I've decided it's only worth seven), there's no longer an incentive for them to pay because the job is complete.
There's not much a contractor can do when someone stiffs him for a grand or two -- at least, not much that he can talk about out loud.
Ken
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My company does not receive the final payment until the punch list is complete, unless a separate agreement is made with the buyers in a case where we are waiting for something. Then there is a holdback commensurate with the value of the item wee are waiting for.

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Here is another twist to your dilemma: in Texas, the Texas Property Code states the property owner is required retain 10% of the total construction bill for 30 days following completion of work. Failure to do so may subject the owner to additional liability to subcontractors. Property owners are required to pay contractors within 45 days of properly performed work after receiving a request for payment.
Maybe your state has similar requirements.
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You should have it inspected and get sub lien releases first or what ever is apropriate in your area. Talk to him he may need some cash now but hold back a portion till you are sure everything is right. If all has ben fine it will work out.
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snipped-for-privacy@swbell.net says...

What is written above is not 100% accurate and complete. If you live in Texas go look it up at www.capitol.state.tx.us
Do not let some shady supplier or subcontractor bully you by misrepresenting the facts. And always competent legal advice is recommended. Chapter 53 is a must read for anyone engaged in residential construction in Texas; owner, contractors, subs, and suppliers ...
Reader, I'm not saying that you are shady or purposely misrepresenting the facts.
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Well thanks for the 'not shady' disclaimer... My statement above came from a textbook published in 2001. Comparing it to the TX statutes online, I can see the 45 days is wrong and it's actually 35 days, but the rest is correct. Reference subchapters 28.002. PROMPT PAY REQUIRED, and 53.101. REQUIRED RETAINAGE, and 53.105. OWNER'S LIABILITY FOR FAILURE TO RETAIN. These can be found here: http://www.capitol.state.tx.us/statutes/pr.toc.htm . Like MikeP said, seek proper legal advice.
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http://www.capitol.state.tx.us/statutes/docs/PR/content/htm/pr.004.00.000028.00.htm

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Dan Listermann wrote:

I'd hold back 5-10% until you have the COA.
Matt
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says...

Payments are to made as specified in the contract documents.
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Your contractor is very much used, as ALL contractors, to have a bit of money unpaid till the project is fully completed, inspected, approved, etc...
So, if he his trying now to talk about final payment before final completion, there are 3 possible explanations:
1 - He got an urgent cash need. If you are happy with what he is doing and have a good relation with him, pay him whatever you can but keep a retention, say 5 to 10% of contract value, depending of the overall amount, till it is *really* finish.
2 - He doesn't trust you and is scared not to be paid when the project is fully completed. I don't think you would be posting here if you were one of those bad-payers, but there are, understand him, he may have an impressive receivable account... Apply the same solution as above.
3 - He expects something wrong with the final inspection and intend to get his money and run away.... Then, you are in a mess.
You are the sole one able to decide which one is the correct one. Cheers Daniel
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In some countries it's not unusual to withold 10% until 6 months after completion of major works to allow any hidden defects to come to light and be fixed.
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To bad we can't do that when buying autos...

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