THE FINAL CHECK

In This Article
Substantial Completion
Retainage
The Punch List
Disputed Work                              Back to all FINANCE articles

Many jobs go without a hitch, and small problems are usually resolved peacefully through negotiation. However, if unresolved problems remain at the end of the job, final payment can become a contentious issue. It is important to have some financial leverage at the end of job to help motivate the contractor to take care of any loose ends, and to do it promptly. In fact some contracts have a liquidated damages clause specifying financial penalties for missing the contracted completion date.

SUBSTANTIAL COMPLETION
Most contracts require full payment for the job, minus any money held back for punch list items, at substantial completion or at the issuance of a Certificate of Occupancy (CO). Substantial completion means that the project is complete and usable, except for a few minor loose ends. When the job has reached the point of substantial completion,  but before the final check is cut, the owner and contractor do a formal “walk-through” of the project. Together, they compile a punch list, noting any loose ends that need to be resolved before the owner accepts the work as complete.

I would recommend that you tie your last big payment to substantial completion, rather than the owner getting a certificate of occupancy, since each town and each building inspector has its own policies about when to issue a CO.  Substantial completion has a legal definition. It means that the project is complete enough that it can be used as intended. That still leaves room for disagreement, but if all parties are reasonable, there should not be a problem. Before you agree to hand over the last big check, make sure that the hold-back is enough to cover the unfinished work.

RETAINAGE  
If you are working with a bank or an architect (using an AIA contract), there will be language holding back 5% to 10% of the cost of the job until it is “”substantially complete.” This amount, called retainage gives you leverage toward the end of the job, when the contractor may be more focused on starting the next job than finishing yours.

Whatever amount of retainage is agreed to is deducted proportionately from each draw. For example, for a 5% retainage, each draw would be reduced by 5%. If a fixed retainage of $5,000 is agreed to, and the job has five draws, then $1,000 (or an apportioned amount) would be deducted from each draw to total $5,000. In the sample custom home draw schedule, the retainage has already been built into the payment schedule.

If the contract does not specify any retainage, make sure that the last check is not due until substantial completion,  and that you reserve the right to retain funds (hold-back) to cover all punch list items. Regardless of the specific contract language, if the job is nearly done and the contractor is anxious to get the final check, you should negotiate a partial payment, making it clear that you will pay the rest when the punch list items are completed. The standard hold-back amount is about twice the value of the punch list items.

How much retainage? Retainage is typically in the 5% to 10% range, although some contractors will negotiate for a fixed fee or limit. It’s hard to generalize, but in my opinion, 10% works well on smaller jobs up to, say $100,000, while 5% is probably adequate on larger jobs. It’s important to have a little leverage at the end of the job when the contractor’s focus is usually on the next job and it’s easy to let things drag on. Once you release the final large payment, you should still retain a small “hold-back” of at least twice the value of any remaining punch list work — enough to get another contractor to complete the job if necessary.

THE PUNCH LIST
Upon substantial completion, but before you release the final large check (or retainage, if specified in the contract), you and the contractor should do a walk-through to identify any loose ends that need to be tied up.  It’s a rare job that has no loose ends: a special-order fixture that has not arrived, a missing molding, a gap in the woodwork, a cracked tile, torn screen, sticking window or door, and so on.  All these items are noted on a written “punch list” jointly developed by the contractor and owner (or owner’s representative).

A checklist, like the one below,  is useful to make sure you don’t overlook any important details:

 Residential Construction Walk-Through Checklist  
 For new homes, additions, renovations, and K&B remodels
 Electrical

  • All receptacles and switches work, proper polarity checked
  • GFCI receptacles tested and working
  • Switches, receptacles, and covers are the proper color
  • All device plates installed straight and tight to the walls
  • Light bulbs installed in all fixtures and all in working condition
  • Telephone jacks working
  • Cable TV jacks working
  • Network jacks working
  • Door bells, intercoms, alarms, lighting controllers, and other house electronics working properly
  • Circuit breakers labelled accurately in Service Panel

 Plumbing

  • Correct fixtures and colors
  • Toilets all working
  • Faucets all working
  • Showers and bathtubs all working
  • Whirlpool tub working
  • Tub and sink drains can hold water
  • No scratches, chips or nicks on any plumbing fixtures
  • Refrigerator ice and water filter working with no leakage.
  • Garbage disposal working properly
  • Outdoor spigots working

HVAC

  • Air conditioning working properly and properly zoned
  • Heating system working properly and properly zoned
  • Water heater working properly with non-scalding thermostat setting
  • Whole-house ventilation system working properly
  • All thermostats and system controls working properly
  • Fireplace works properly, draft and damper working

Interior 

  • No squeaking, unevenness, on floors or walls
  • No water leaks staining walls or ceilings
  • Painting satisfactory in all rooms and closets; no touch-up required
  • Wall finish: no dents, scratches, nicks, nail pops, or visible finish defects
  • Ceilings: no dents, scratches, nicks, nail pops, or visible finish defects
  • All interior wood trim and moldings in place and properly installed with no open miters or cracks
  • Windows all working and sealed properly
  • Doors all working and sealed properly. All keys acquired
  • All glass in windows and doors good with no cracks or chips
  • Wood floors properly installed and finished with no stains, marks, or large gaps
  • Carpets properly installed with no stains or lumps,  and all seams match
  • All tile and stone work is flat, with solid grout joints, no cracks in tile or grout, and flexible sealant at all corners and joints with other materials.
  • Wall coverings installed properly with no damage
  • Appliances are the correct color and models, and all working properly
  • All appliances are  working properly
  • All cabinets and countertops checked for scratches, nicks, cuts, cracks or burns
  • All cabinet doors open and close properly
  • All drawers operate freely
  • All cabinet hardware installed properly

Exterior

  • All windows and doors tightly sealed
  • Exterior siding, brick, stucco, or other finish shows no cracks or damage
  • Exterior trim installed properly with tight joints.
  • Exterior painting and staining satisfactory; no touch-up required
  • Min. 8 inches from ground to wood siding or trim
  • Ground graded properly away from the structure
  • Shrubbery at least 2 to 3 feet from the foundation
  • Gutters and leaders all installed and not damaged; direct water away from foundation
  • Garage doors and openers work properly
  • Roofing installed flat with no missing shingles and the proper color
  • Landscaping meets contract requirements

Miscellaneous

  • Basement free of dampness, leakage, and cracks (other than tight shrinkage cracks)
  • Jobsite is clear of all debris and nails
  • All items in the house are the right color, model and size as specified in contract
  • All appliances and equipment have directions and warranties
  • All proper paperwork received and Certificate of Occupation
  • Special instructions for care of floors, finishes, counters etc., have been reviewed

 

 

When the final check (or retainage, if any) is paid to the contractor, the owner should withhold at least two times the value of the punch list items – this is the industry standard and should be specified in the contract. The amount is negotiable – for small items, some people hold back as  much as 10 times the assigned value to provide a greater incentive for the contractor to take care of these small, but often annoying, items – annoying to both the contractor and the owner.

While it’s not common, I think it’s very reasonable to ask the contractor for an estimated completion date in writing. If the work cannot be completed until next spring — due to winter weather, for example — the deadline for that item would need to be extended. Assigning deadlines helps focus attention on your project and also puts you in a better position to hire others to finish the job is the deadlines are ignored.
 

SAMPLE PUNCH LIST FORM

Item no. Description Value Completion date Approved by Owner
1 Dimmer switch in dining room hums loudly  $20
2 Scalding water at shower/tub spigot  $25
3 Tub drain plug will not hold water  $25
4 Gap between back of window trim and walls. $200
5 Touch-up paint window sills, as needed. $100
6 Basement window screens broken, need replacement $175
7 Windows in office and master BR much to tight – difficult to open $200
8 Vanity doors need adjusting, Master Bath  $25
9 Garage door opener runs rough, out of alighment  $50
10 Cracked tiles at entry $150
                                                          Total Value $975
                    Total Due Upon Completion   (2X)                      $1950

 

The dollar values of the punch list items are assigned by the contractor. If you’re not happy with some, particularly for big items like painting the exterior of the house, then, then you may need to get the opinion of another building professional and negotiate for a more realistic hold-back amount. You should only release this money when all the work is completed to your satisfaction. It’s your only leverage at this point.  If some of the work is not completed in the time frame agreed to, and you are unable to agree on new terms, then you should pay for the work completed and retain enough money to hire someone else to complete the job (after checking with your contract and/or lawyer, as needed).

Punch list tips:  It’s best for you and the contractor to do separate walk-throughs and compile separate lists before the final joint walk-though.  The contractor may notice things that you would have missed. Conversely, you are likely to notice things that the contractor overlooked.   I recommend that you do your private walk-through with your spouse or friend, and take the time to scrutinize the job at your leisure. Open and close doors and windows. Try fans, lights, etc., to make sure everything is working as it should. Finally, do a walk-through together with the contractor to combine your lists and discuss any outstanding items. If you go unprepared on a quick walk-through with the contractor and his clipboard, you may overlook things that shouldn’t be overlooked. At this point the contractor is anxious to get the final check and move on to the next job, so you may need to be the one push for legitimate punch list items. Be reasonable, but don’t be a pushover – the job is not right until its right!

Quality standards. There may be some disagreement as to what belongs on the punch list. For example, a visible lump in the drywall, bubbles in the polyurethane, an uneven gap around a cabinet door, a rattling exhaust vent, and so on, may fall within the contractor’s quality standards, but not your own. If you have an architect or construction manager involved at this point, he or she can help by citing accepted industry standards. Ideally, the answer is in the specifications – yet another reason to have really clear specifications. If the drywall specs say  “ All joint compound shall be smooth and free of tool marks and ridges” then you shouldn’t see any ridges.

A set of minimal quality standards such as the  Residential Construction Performance Guidelines from the builders organization NAHB can offer some guidance, but many of these standards are below what most customers expect of a custom home or remodel. Regardless of the specific standard applied, hopefully everyone is still getting along well enough at this point to come to a mutually acceptable resolution.

Punch list or warranty issue? The contractor may say that some items, like a sticking window, are really warranty items that should be taken up with the manufacturer. Whether it’s a manufacturing problem or due to improper installation is often not clear. In any event, if the job is not complete and you have not accepted the work, it’s the contractor’s job to make it right, not your job to deal with manufacturers’ reps who, in my experience, are often not very helpful.

Time limit. Once you and the contractor agree on what belongs on the punch list, ask the contractor for a time commitment (one to two weeks?) to complete the work. At that time, you make a final inspection and, assuming everything is OK, make the final payment.

DISPUTED WORK
If, despite your best efforts to resolve things peacefully, the contractor refuses or is unable to make some aspect of the work satisfactory within the allotted time, then you should withhold enough money to pay someone else to complete the job.  Once you know how much it is going to cost you to get the job completed correctly, you can make a partial payment to the original contractor, deducting what you need to get it done right. Add a notation to the check that states, “This check constitutes full and final payment for [job description].”  Playing hardball like this is a last resort, but may be you only recourse other than paying for the job twice.

See also: Contract language for Substantial Completion and Final Payment

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Comments

  1. Move in Without Certificate of Occupancy?

    Hello. My house was flooded in April & May of this year, to the roof. The insurance company approved 90% completion October 13th and made payment. There is approximately $7900 left owing on the contract/change orders, of which only $750 has been invoiced. There are still things not complete and there is some damage caused by workers. After missing the deadline he gave us of two weeks ago, we told him last week that we had to move in no later than tomorrow and needed to have all of his work completed. He responded to me today and said that we cannot move back into our house until he is paid in full. I don’t see anything in the contract that references this and I cannot find anything online. Is this true?

    • buildingadvisor says:

      The contractor cannot bar you moving into your own house unless that is written into the contract. However, it could interfere with his completing portions of the work. He might be referring to the Certificate of Occupancy (CO).

      Most likely, you will need to obtain a new or updated CO after the level of repair work you are doing. These are generally required for new construction, changes in a building’s occupancy, and major renovations such as yours.

      If that’s the case, you are not supposed to move back in without a Certificate of Occupancy (CO), which is not issued until the final inspection by the local building department. Technically, it is illegal to move in without a CO. Some municipalities are more strict about this than others. In the worst case, you can be fined or run into other legal difficulties with the town. In addition, your homeowner’s insurance may be invalid until the CO is issued.

      On the other hand, plenty of people move into a house without a CO and obtain it later without problems. It really depends on the local regulations and attitude of your local officials. Some municipalities will provide you with a temporary CO for situations where the work is mostly completed and there are delays beyond your control. The safest course of action is to check with your local building inspector.

      Regarding your contractor, you should not pay in full until the work is completed and approved by you. The terms and amount of the final payment should be covered in your contract. Some contracts require most of the final payment at “substantial completion,” with a small amount withheld for punch list items. Others wait for the final payment until after all punch list items are completed.

      Best of luck with getting the project completed as soon as possible!

  2. Invoice After the Final Signoff?

    Is the contractor legally required to give you the final invoice before the final sign off. That is, can the builder give you an invoice after you have signed off on the project?

    • buildingadvisor says:

      The final payment on a construction contract is often a stressful time when any conflicts, misunderstandings, or dissatisfactions over the course of the job come to a head. Final payment can be handled in different ways, but typically, the owner makes the final large payment, based on the draw schedule, upon “substantial completion.”

      Whether you have a fixed-price or cost-plus contract, it is customary for the contractor to apply for final payment, and for the owner to do a walk-through inspection before “signing off” (accepting) the work and releasing the final check. At that point, the owner may withhold a reasonable amount to cover the cost of any punch list items.

      It sounds you were surprised by a large invoice after you thought the project was fully paid for. Whether or not the invoice is valid would depend on the specific language of your contract and state law. If the invoice was related to change orders or allowances, these should have been agreed to in writing when the work was done – not presented as a last-minute surprise invoice.

      At a minimum, the contractor is disorganized in his billing procedures and did a poor job of communicating about project costs and overruns. At worst, he wanted your signature accepting the work, before hitting you with a big bill at the end.

      If you feel that this was an intentional act to get paid an unfair amount, I’d suggest you have a brief conversation with a construction lawyer about your legal options.

  3. Withholding Final Payment on Substandard Fire Repair

    My daughter and son in law lost everything in a house fire. The are rebuilding and things were going well till the finish work. They cannot get the contractor to fix, or even acknowledge, some significant issues. The were to move in two months ago. The occupancy permit has already been issued. The final draw has not been made. They are going to move in and not make the final payment till he fixes the issues. Some of the issues are cracked concrete on steps Cracked fiberglass tub. Uneven countertops 1/2 inch out of level. Did not cover laminate floor an a lot of scratches. Paint spatters all over one side of vinyl siding. Plus there are a few more problems. They believe the contractor is holding them hostage, so they are going to move in. Do you think this is OK?

    • buildingadvisor says:

      Insurance work is always tricky as there are several parties involved: the insurance company, adjuster, contractor, owner, and a bank if there is a mortgage. Each party has its own agenda and may not be working in the best interests of the owner. For that reason, owners often find the process stressful and end up dissatisfied with the outcome.

      It is good that the final draw has not been released. Your daughter and son-in-law should contact the insurance company, mortgage lender, or whoever is controlling the funds and inform them of the incomplete and defective work and instruct them in writing not to release the final draw until the work is completed properly. If they have full control of the funds, that simplifies things.

      In the meantime, they should document in written, dated notes and photos the incomplete and defective work, and keep copies any correspondence with the contractor. Also, they should document in writing any phone calls or conversations with the contractor. That way, if this ever goes to court, they will be in a much stronger position than trying to recall from memory who said what to whom and when.

      If an occupancy permit has been issued, I don’t see why they can’t move in, unless this would violate the contract. If the project was substantially delayed, through no fault of theirs, and they incurred extra costs for rent or other housing, this is also a cost that the contractor may be responsible for, depending on the wording of the contract, and the laws in your state.

      Before moving in, however, it would be a good idea to speak with a lawyer, or perhaps someone in your state’s consumer affairs office. State laws regarding construction contracts and insurance claims vary from state to state, and they don’t want to do anything that would weaken their position legally. Sometimes a quick consult with a lawyer and a single lawyer’s letter can motivate a contractor to do the right thing.

      They should also ask a lawyer what procedure to follow if they need to terminate this contract (fire the contractor) and use the money from the final draw to pay another contractor to complete the job. Again, there are specific procedures for doing this that should be followed or the homeowners could be liable for a breach of contract.

      Best of luck in getting the job done properly so the owners can put this behind them and move on with their lives.

      Related links: Documentation     Dispute Resolution

  4. Punch List Dragging on For Months

    We had a complete gut renovation at out 3 bedroom apt. We are at the end of the renovation (95% completed and living already in the space) and my contractor has been delaying and not coming to finish off the job. Currently we hold 5% of the total job including all change orders, which equals to about $24,000. We are have been waiting on a punch list and the C.O./inspection for months now but nothing.

    First of all, my contractor had a lot of trouble finding a suitable and reliable millworker to build our living room bookcase, a/c radiatior covers, kids closets and desk system. He changed three times and built 3/4 of the job. 1/4 which is the girls closet and desk system is still not built. It has been 2 months nobody shows up and we have been given the run around. We also keep getting phone calls from his first millworker saying he wants to get paid and wants to put a lien on our property. I told him I don’t have a contract with him and that all payments should be dealt directly with my contractor. He said he cannot ever reach my contractor because he does not pick up the phone. I asked my contractor to release us from this portion of the contract (about $13,000) so I can subcontract it out but had no response from him.

    Secondly, we were notified by the neighbors downstairs they have their ceiling in the master bathroom damaged due to some water leakage. Super has checked and said it could have come from us. The contractor “said” he will address it, but two weeks passed and nothing.

    Thirdly, my kitchen has no passive vent panel in the ceiling nor a place to vent out the heat above my stove. It has a hood, which model is supposed to hook up to a pipe and direct out to the building’s vent system, but the contractor did not install the pipe connecting the hood to the pipe, so currently we have to open the cabinet above the hood to vent out the hot air, otherwise the cabinets overheat.

    There are other smaller punch list items due as well like doorknobs, lighting in build in cabinets, etc but we just wanted to get these three major ones done and are willing to forfeit the smaller items. What do you recommend we do? Do we fire him before getting a C.O.? Do we hire a lawyer? Can he keep the job open for such a long time without closing the permits? Thanks.

    • buildingadvisor says:

      From what you describe, your contractor is, at best, highly disorganized and over his head — at worst incompetent and highly unprofessional. Sounds like an extremely frustrating situation.

      Unfortunately, it is not uncommon for small contractors to take on more work than they can handle, often taking on new work (and new cash flow) while leaving current jobs incomplete and unattended to.

      The most disturbing part of your story, and there are several, is the lack of communication about the incomplete and substandard work. To me, not returning phone calls in this type of situation is inexcusable and leaves you few options other than to wait indefinitely or take legal action.

      To protect yourself, you should be documenting the various problems with detailed notes, photos, and any correspondence by mail, email, or phone calls/messages. A simple log of who said what to whom and when will go a long way if you end up in a dispute process.

      Assuming you have a written contract, check the section on dispute resolution to see if it stipulates a method such as mediation or arbitration. Arbitration is a little simpler and cheaper than civil litigation, but tends to seek a compromise solution even when the contractor is clearly at fault.

      Also check with your state’s attorney general or consumer affairs division to see if there are specific procedures in state law regarding residential remodeling contracts. If your contract specifies a completion date and states that “time is of the essence” or has a liquidated damages clause (less likely), then you would have more leverage in getting work completed and being compensated for unreasonable delays.

      After documenting the problems in writing, I would attempt to schedule a face-to-face meeting with the contractor and present a written list of work that needs to be completed or corrected and ask for a response, in writing, of when and how the work will be completed. If he is unable or unwilling to comply, then you will have to terminate the contract and find another contractor, or individual subcontractors, to complete the job. If you have retained enough money to get the work completed, then you are in better shape than many clients with shoddy, incomplete jobs.

      Before taking the step of terminating the contract, I would definitely speak with a lawyer about the proper procedure, which varies from state to state.

      Regarding the permits and CO, I don’t think you will have much luck getting the local jurisdiction to take any action. Many permits are never closed out, which only comes to light during a title search years later. When you are ready for the final inspection and CO, however, just contact the local building department and explain your situation. They should be happy to work directly with you even if the original contractor took out the permits.

      Finally,you would be doing others a favor by reporting the contractor to the BBB and state division of consumer affairs. You should also file a complaint with the state licensing board, assuming you are working with a licensed contractor. In choosing a contractor, remember to always check references — picking the right contractor is the most important decision you can make in any building project.

      Best of luck in finding a suitable resolution and getting your job completely properly.

  5. Victoria Ward Traynham says:

    How to Resolve Punch List Dispute

    We renovated a home (our first home) using a standard rehab loan because the crawl space on the almost 100 year old property didn’t qualify for a Federal 203K loan. The Standard load required us to hire a GC & gave that GC 6 months to complete the project. Over a year later, the project is “Substantially Complete” however, the contractor refuses to correct a major punch list item and has been demanding compensation of $2,000.00 for what he claims is for services performed.

    We have requested (over a dozen times in writing) that he provide an itemized invoice for these items and that he meet with us in person to discuss these items. He categorically refuses to meet with us and he denies that the punch list item in question even requires his attention despite the HUD inspection failure. We have reminded him that failure to complete the job to customer satisfaction and per HUD requirements means that he is in violation of the contract. In a recent e-mail correspondence, he states that if we pay him the 2k (he claims we owe), he will fix the punch list item (therefore acknowledging an issue).

    He is now levying threats about putting a lien on the house because we refuse to blindly pay him 2k and we won’t release the final payment of 15k until the project is completed to satisfaction per contract. I have 3 questions. 1) Isn’t this a form of extortion? 2) Does moving into the property which is meant to be our home signify or constitute satisfactory completion? 3) What should we do? Any advice would be helpful. Thank you!

    • buildingadvisor says:

      Sorry to hear about your situation. It is always difficult, at a distance, to understand and untangle these types of disputes. Also I am not a lawyer and you are asking legal questions. Furthermore, liens are governed by state law and the provisions vary a great deal from state to state. The timelines and conditions for filing a lien are very specific. Also, the specific language of your contract regarding final payment, substantial completion, hold backs, and liens come into play here.

      In general, you are obligated to release the final payment at substantial completion, minus any hold-back for punch-list items. In the absence of an agreed to hold-back amount, the general rule is that you hold back at least twice the cost of the work to be done. You want to hold back enough to pay another contractor to complete the work, if necessary.

      If there is a major flaw or significant incomplete work then the job would not be considered substantially complete. Whether the work to be done is substantial enough to justify withholding payment is a judgement call. Punch lists are generally for a missing piece of molding, sticking doors or windows, missing cover plate, etc. To some extent, it depends on the size of the incomplete or defective work compared with the overall size of the project. If you have acknowledged in writing that the work is substantially complete, however, then you would be responsible for the final payment, minus any hold-back.

      While issuance of a Certificate of Occupancy (CO) and moving in do not, in themselves, constitute substantial completion, they are important considerations. The AIA contract defines substantial completion as the stage when the work is : “sufficiently complete in accordance with the Contract Documents so that the Owner can occupy or utilize the Work for its intended use.”

      Regarding the $2,000 charge, if you never agreed in writing (or verbally) to additional work for an additional charge, then you should not be responsible for payment. If the charge does not stem from a change order, allowance, or other contract provision, and you don’t even have a written invoice or description of the work, then it’s difficult to see how you would owe money.

      Finally, it is easy for a contractor to file a lien if he is within the statutory time limits. If the lien is fraudulent and based on improper charges or work that is defective or unfinished, then you can legally challenge the lien – again following strict timelines.

      Ordinarily, I would recommend that you sit down with the contractor to try to negotiate a mutually agreeable resolution. This is almost always preferable to legal action. However, it sounds like that is no longer an option here.

      There are a number of complicated legal issues here. If I were you, I would schedule a one-hour meeting with a lawyer to better understand the job’s legal status and your options. Get organized beforehand with all the relevant documents (contract, plans, loan documents) as well as photos of the defective or incomplete work. Bring a written list of your questions and be prepared to take notes. The clock is ticking, so use your time with the lawyer efficiently.

      Best of luck in finding a workable solution.

  6. Can I Legally Hold Back Final Payment?

    We have received the Occupancy Permit and are moving into the house. Our punch list is not completed and our general contractor has not held 10% from any sub during construction. I believe that if I pay the final bill in full that I will be at the mercy of the subs “whenever” schedule to complete our list.
    The general already has them working on other projects.

    Can I legally do this even though I do not have a holdback clause in contract? I am using a title company to pay all bills and get lein release from all subs each time we pay. The last bill will be about $30K and I was thinking of holding 10% until the punch list is completed since he holds all the power over the subs. I would have title company hold the funds in trust. Appreciate any suggestion.

    • buildingadvisor says:

      Retainage of 5 to 10% is pretty standard – in general, you want to retain enough money to pay for someone else to complete the job, if necessary (and also to motivate the GC to get it done).

      You are correct that the GC is fully responsible for the work of the subs – your relationship is with the GC, not the subs. So you shouldn’t be obligated to pay the GC for work that the subs have not completed.

      Because the holdback is not written into the contract, it’s a somewhat gray area. However, I believe you should only pay for work that is completed. If the work is not completed, then you are justified in withholding a reasonable amount of money. The legality of the issue would depend on state law where you live and the specific language of your contract. But, for practical purposes, it is a matter of negotiation between you and the contractor. No one is going to go the court over this.

      You don’t want to alienate the GC, but I think it’s reasonable to withhold a small amount of money. You can explain your reasoning in person, or in writing, and hopefully the contractor will respect your position and be cooperative.

      Best of luck with finding a suitable resolution and getting the work completed quickly!

  7. Contractor Ignores Our Concerns at Walk-Through

    We recently built a home and are scheduled for a final walk-through. I noticed last week the backsplash we had installed was chipped and cracked in several spots (it’s mosaic glass) and the hardware on the cabinets were not installed correctly. The hardware is not centered and to the bottom of the drawer. I am concerned the contractor will be dismissive. They also forgot to install a water loop and we brought it to their attention before all drywall was completed they treated us as if we were idiots. Sales rep and contractor said it would be added later and it wasn’t. Any recommendations for dealing with builder?

    Thank you!

    • buildingadvisor says:

      There is no magic here other than to stand your ground and insist that the important items be corrected before releasing the final check. Hopefully, you have withheld some money pending the walk-through. As in any negotiation, you need to decide what is most important to you and where you might compromise. Be firm but polite. You may give a little here to get a little there.

      In preparation for the walk-through, I would recommend documenting all the problems with photos, if possible, and written and dated notes of who said what to whom and when. These will come in handy should any of this escalate into a more formal dispute process, such as arbitration or small claims court (hopefully, not the case).

      I have been on both sides of this fence. I had some problems several years ago when my wife and I had a new home built by a pretty conscientious custom builder/developer. He took care of the small problems such as missing moldings, but resisted dealing with several double-hung windows that were very hard to operate. The problem, as I saw it, was that the windows were installed incorrectly – not an easy problem to fix. The contractor insisted they were in the normal range. We agreed to have a manufacturer’s rep come out. The rep hemmed and hawed and ended up spraying all the sash edges with silicone spray (which he kept handy for this problem). He admitted that they weren’t perfect but said they would loosen up over time. I compromised here and lived with it.

      On a more recent remodeling job, I had the GC rip out half a wall of tile in a new shower stall because they were laid out poorly – after I had given him clear instructions.

      None of these things will endear you to the contractor, but this is a business relationship, not a popularity contest. Decide what is important and stick to your guns. From your description, the plumbing loop and damaged backsplash should definitely be fixed. The cabinet hardware should certainly be centered left and right, but is often off-center up and down. To move them, they will have to patch/putty the screw holes – not sure you want that. If they are really messed up and need to be moved, the contractor may need to replace the drawer fronts.

      Read more on The Final Check and Punchlist.

    • courtney durham says:

      Hold enough money back to pay another contractor to correct work (as needed)

  8. Jean Sorochka says:

    Should I Accept New Tub With Chip?

    I am purchasing a new home and had my walk through today. There is a deep chip in the soaking tub in my master bedroom and they said it would be fixed with filler and they could have a professional come and do it. Otherwise to remove the tub and reinstall it would take 3 days of work.

    My concern is that it shouldn’t have been installed with the chip or if done afterwards should have been replaced or brought to my attention before this so I could make a decision beforehand.

    There is 1 year warranty on the tub and my fear is that the filler will start to deteriorate after a period of time and then it’s my problem. Your thoughts or recommendation?

    • buildingadvisor says:

      It’s hard to say who made the chip or when, but that’s why you do a final walk-through. A lot of tradespeople work in a new home and anyone could have dropped a tool, pipe, or whatever. These things always seem to happen at the last minute due to one careless mistake — like moving a stepladder with a crowbar on top (I did this once – duh!)

      If it was me, I would opt for a new tub rather than a repair. How successful a repair is, and how well it matches the original, depend on the material the tub is made of, the skill of the repair person, and whether they have access to factory-matched repair materials. Both fiberglass and acrylic tubs are fairly easy to repair, but it’s not so easy to get a perfect match on color and gloss. Acrylic is a superior material that is harder to chip and has color all the way through. With fiberglass, the color and gloss are in a thin “gel coat.”

      Also, your concern about the longevity of the patch is legitimate. It may last for the life of the tub — or not if conditions were less than perfect when the patch was made. So if they are offering you a new tub in three days, why not take it?

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