How To – Can I Withhold Final Payment From My Contractor?

Tags: Contractor Center · HowTos

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    Recently someone asked if they could fire their contractor at the end of the job and withhold final payment because the finishes and decorating in the new addition they had added to their home were not of good quality and the final completion date was two months past a three month completion estimate given in the contract.

    There are two questions in this question. First was the work completed in a workman like fashion and was the work completed on time.

    The simple answer for people will be:  No, you can not fire a contractor at the end of a job and withhold payment. However you may be able to take your case to court to withhold or recapture some of the final payment if the work was substandard.

    The fact is a lot of people will have buyers remorse whether they are buying an addition to their home or a high priced European sports car that doesn’t end up getting them dates with high priced fashion models. This does not mean that you can withhold payment for services that are of general good quality.

    Its like buying cookies at a bake sale.. they could be the best you ever had or maybe not so good… but the law will only ask if they were cookies and if they were  made in a reasonably eatable quality. And you won’t be able to get a refund after you ate them unless you can prove otherwise.

    The law understands this and if you worked with a competent contractor they should not be penalized just because the finished product you received was not exactly like the picture you saw in a magazine.

    However if you can prove your case in court AND you are willing to take the case to court… there is nothing wrong with defending yourself if a contractor is in the wrong.

    Completion Dates

    Most contractors will provide customers with a general but open-ended completion date in their contract to make their client aware of when work will be performed. Unfortunately many customers do not take time to read the contract and believe these dates are hard and final.

    In almost every contract worth its ink there are provisions that the contractor can use to extend a completion date.  The first would be Acts of God such as extended rain, snow or other situations beyond the control of the contractor. Other reasons include delays in ordered materials. If you order a hand made sink that takes another week to deliver they won’t be accountable to work 24/7 to get your job done by Friday.Additionally any hidden or unforeseen work that needs to be completed. This could include any problem found including: framing,  plumbing, electrical problems inside walls or other unknown work that must be completed before the original contract can continue.

    Finally are change orders. If a customer makes changes to the contract the contract is basically void to some extent and the changes allow the contractor to increase costs and extend completion times. Sometimes changes are not agreed to and a contractor can walk away from a job in the middle of it and do so legally.

    Workmanship

    If a contractor decides to not make repairs to workmanship issues that are brought up by a customer the customer can withhold payments but they must bring their case to court in most instances to finalize the contract and release it.

    If a customer finds that a contractor has completed work that is extremely substandard or that can not pass inspection or causes safety issues the best way to handle this is to notify the contractor by certified registered mail with signature required.

    Depending on the size of the project you may need to take your case to small claims court or to higher court. You will also need to bring evidence  of the workmanship issues and statements from a third party contractor are going to be necessary in most cases.

    What if you just Withhold the money and Don’t Go to Court?

    The only ONLY time that this is ok is if both the customer and contractor agree that money can be withheld and the contract can be finalized in writing.

    If you contact the contractor and for some reason they won’t or can not make the repairs and they agree to finalizing the contract in writing you must make sure that this includes releases from all of their subcontractors.

    If your contractor had to hire a plumber or electrician and did not pay them then the subcontractors could come after you individually.

    Final Note

    When working with a contractor you must READ YOUR CONTRACT…  you must agree to the terms of the contract before you sign it and which provisions allow you to make partial payments, withhold payments or dispute workmanship.

    You should also look at the work that is performed not only from your side but from the contractor’s side. If there are unforeseen problems in a contracted job the contractor is almost always likely to lose money on the job. If there are delays the contractor loses money. The reason for this is that jobs are scheduled and if they can not move on then they will most likely lose a complete job on top of losing money on your job.

    But if you feel you have been taken advantage of  contact your contractor and if an agreement can’t be made go to court.

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