Final payment..When to pay it?
We had a bedroom added to our house, and 3 months later the contractor wants his final payment of $4000 (10% retention payment) I gave him a list of items that needed finishing, repairing, etc.
All grass is dead in backyard from storing all the drywall, stucco, roofing materials and trash for 2 months, chips in my new pergo from falling tools and sloppy nail placement, testure overspray on the carpet, drywall gaps between carpet and edges of stairway steps, stucco is sloppy, and the list goes on.
I priced out the repair work and is is about $3000 to finish everything up
He is demanding final payment because the city inspector gave final approval.
The contractor is now placing a mechanics lien on the home.
You probably need to pay $100 to $200 to consult a reputational lawyer at your area as what to do next... by yourself... rather than hiring a lawyer down the road... if possible...
you wouldn't want to trust any advice given here even they may be the truth considering this is a legal matter... you want to be sure...
Send a certified letter demanding that he fix his errors that are part of the house. Cleaning of any rugs or repairing the lawn is not his expertise, so withhold the amounts for these to have professionals come in to clean or repair them. When he complys, pay him the differance.
As it stands now, he does not have a case if he damaged your property and does not feel obligated to repair it unless there is a contract involved that relieves him of the responsibility.
If he places a lien on your property, Call the BBB and file a complaint, then contact an attorney.
First of all, read the contract VERY carefully and see what is and is not covered. Then, TALK to the contractor. There may be a miscommunication somewhere. Explain your concerns and ask him straight out what he plans to do. Leaving damaged or bad construction is not in the realm of the inspector. Lastly, let him know you will hire an attorney if necessary. DO NOT threaten him. Just have a civil conversation so everyone knows where they stand. Good luck.
As mentioned, you need to read the contract you have with him VERY, VERY carefully. Here is an example of one area of what our contract states:
.... Payments are to be made as follows:
...........If necessary, Invoice(s) may be submitted by our Company to the client for payment. If Invoiced, Payment is due upon receipt and is considered past due five (5) business days from the receipt of invoice. If the Client has valid reason for disputing any portion of an invoice, Client will so notify the Company within four (4) calendar days of receipt of invoice, if no such notification is given, the invoice will be deemed valid. The portion of the Company's invoice which is not in dispute shall be paid in full. Final Payment: This payment is due immediately upon substantial completion of the scope of work as outlined in this proposal. At the time of completion a walk-through will be performed with the customer. Any defects, touch ups, and ONE (1) final “bump” are included as part of this contract. These items will be addressed at this time, but shall not delay this final payment. When work falls under the description of a ‘commercial contract‘, Payment schedule may be subject to a Company approved change. If payment of invoices is not current, XXXXX Construction Services Inc. may suspend performing further work until such payment is received. Payments not received after 30 days may be considered a breach of contract. Amounts not received after 60 days will be considered delinquent and subject to finance charges, attorney fees, court costs, as well as additional collection charges. All late payments will be assessed a 2% monthly late fee in addition to the aforementioned costs. All costs incurred in collection of delinquent accounts shall be paid by the Client. XXXXXXX Const. is not responsible for any delays directly or indirectly caused by the Client or Town. Any aforementioned delays shall not hold up the listed payment schedule or any demand for payment when work has been finished to the furthest extent possible of a work phase.
As contractors: We have bills that have to be paid. These may be materials that were charged onto our accounts with various suppliers and vendors. These charges will go up if payment is not made within a particular time period. We need the payments in order to pay sub contractors and material venders .... on time.
This is how the original estimate was calculated. To with-hold payment for extra things, including damages, will cause problems with a GC's abilities to pay their bills and other workers - on time. This will actually cause friction between your builder (GC) and you.
Many people forget the fact that WE, as a company or corporation have extended credit to the home owner by purchasing materials on our credit, paying subcontractors - out of our own pockets, and supplying labor - prior to the actual future payment for services.
We place trust in our clients and home owners. We trust that they will pay us when we have completed each building or remodeling phase of our contract.
To withhold payment based on OTHER incidentals, I say again, will cause friction.
I would only recommend withholding payment ... 'IF'... your GC has a reputation of not returning and making repairs or corrections.
If he doesn't have such a reputation, pay him, so he can take care of his business obligations. Put the same trust in him that he has extended to you when he 'fronted' the expenses of the work on your property.
We, as a company (corp).... will do all we can ( even after the final payment has been made) to make repairs for any damages that we have caused, regardless of the time and expenses out of our pockets.
Example: We had a worker accidently spill a qt. of paint on a brand new berber carpet we installed in a remodeling project. Berber cannot be patched because of it's short fibers. The home Owner did not withhold payment. (We got most of the paint out) On a sunny day, he stated that he could vaguely see 'something'.
We told him that we feel we were responsible and if he could live with it, we would give him some discounted or even free work. If he couldn't live with it, we would cover the costs to replace the section, no matter how much of it would have to come up.
He treated us with respect and dignity and that is how we felt compelled to treat him. If he were to call us tomorrow for more work needed, we would take care of him. If he had played games by withholding payment for incidental extras, we would finish up and never do another job for him (We don't need to be treated as being untrustworthy if we have done nothing to invite such treatment..... that is insulting)
- My 2 cents - and pretty much the general opinion of any decent GC who believes in professional ethics.
You would be foolish to make final payment until the damages are satisfied. Right now, you got the leverage. If you make payment, the contractor may or may not address the problems and if he does, an unskilled worker will be sent to clean your rug and fix your lawn. Your lawn needs to be tilled and resodded. This contractor and his help were careless in the construction. But lets say that the damage to the lawn was unavoidable; but this does not relieve the contractor of any obligation to repair it. One does not damage property in order to build or fix something else unless he intends to repair it to its former state. Don't allow him to throw grass seed down either.
Normally, final payment is only due when the customer is satisfied.
If you signed off your acceptance, then you will need an attorney.
You could pay him and have him sign a legal agreement that he will complete all repair of the damages on your property. If he has any integrity, he should be all for it.
On the other hand:
If he hasn't addressed/acknowledged the fact that he is responsible for the repairs, or is dodging you or has a questionable reputation...or you just plane have a bad gut feeling about him or his company....then that is a different matter....
There sounds like there's alot left out of this story.....
After re-reading the initial post, It is always possible that there could also be stubborness on both sides of the coin....who knows?
This situation has gotten to the point of being beyond reasonable discussion based ..... on where it is already.
You may have to go to arbitration.....
IMHO - The points of repair and damage should have been addresses PRONTO by the 'GC'.
I was assuming that the GC was an ethical one. But, if such matters of repair were not handled at all, I question that now.
If this were a job our company were doing: All the points mentioned in the original post that required the GC's attention, would not even be left for the home owner to request repair or even to ask about, ..........
.... they would be taken care of prior to the HO even having to ask. After further consideration, your guy sounds like he could be a 'dirtbag' GC.
The final payment should not be paid until your complaints are resolved, that is the purpose of retaining this money from the previous payment.As a renovater, I see both real and questionable issues here. If the yard has been left clean and graded smooth, the issue of the dead grass depends on if material storage was addressed in the contract; we try to minimize lawn damage, but a smoothy filled and raked area is our usuall site finish. As the owner you have to realize that some plants and grass will be lost during a construction project.
Real issues like chips in the floor, overspray on the carpets, carpet that does not meet adjoining surfaces, noticably sub-standard levels of drywall or stucco finish are legitimate concerns. What is "sloppy nail placement".. I think the nail goes three inches high, you think the nail goes 4 inches? The first step is to notify the contractor in writing, by registered mail of your concerns, and ask for a specific time frame in which he plans to address the issues(even though you obviously have his answer). If you are beyond direct communication, spend a couple hundred dollars to have an attorney draft the letter. List all of your concerns, but know that it will be a negotiated ending, so settle in your own mind which are the issues you are not willling to bend on. The fact that the building inspector has given approval is of no bearing, his only concerns are structural and safety issues, not asthetics. There are always punch list items on every job, as each person perceives different things as an issue in their mind, but obvious poor work should never make it to the home owners list, they should have been caught and addressed by the contractors crew or the contractor himself. To leave these obvious things unaddressed just sets the stage for the HO to look at everything with a fine tooth comb.
Unfortunatley, I have to agree with AtlanticWB, I think you have found a bottom feeder GC. Good luck.
Don't mean to be the one spoiled sport thats not 100% on your side, but why the he** did it take you 3 months to get around to bringing up your concerns?...or maybe it didn't but this:
I felt the same way reading on down to this post.
When the lines of communication dry up then there is little hope. I suspect he "may" be afraid of doing all the repairs and still have you holding the carrot over his head?
You are afraid to give up the money in case he doesn't do the repairs.
Try having a talk with him on a human to human basis. Otherwise you will both end up the loosers:(
As another GC, you get another dose of what we would do. Atlantic has it dialed in, but why the 3 month retainage? Had I done the job for you, I would expect the checkbook out after the walkthrough, and if not, I would have filed the liens anyway...just to make sure you didn't loose the checkbook or have faulty memory.
Sometimes, you have no clue what we go through to satisfy customers. I live and work in a small town....my reputation would make or break me....and we routinely get calls from over a 100 miles away...one of the things I hear that makes me feel good about my company is when the caller says " I hear you are a good contractor"....well...enough said.
You need to ask the contractor to come over, and serve up a cup of coffee, and just talk about what is bothering you....will the grass come back next spring? This time of year isn't it dormant anyway? So you have chips and dents in your flooring...did you take before pictures and after pictures? What if the contractor doesn't feel responsible because he saw the defects before the work started....you see where I am going with this? You need to communicate...and waiting til the end of a project is not the time to bring it up...when you noticed it is when you bring it up.
Thank you everyone for your responses on this matter. I will give some more details to clear a few things up.
I will try and post the contract here for you all to read and comment on.
Contract. Pricing was on a separate sheet.
NOTICE TO OWNER
This means that after a court hearing, your home, land, and property could be sold by a court officer and the proceeds of the sale used to satisfy what you owe. This can happen even if you have paid your contractor in full if the contractorís subcontractors, laborers, or suppliers remain unpaid.
Under the California Mechanicís Lien Law, any contractor, subcontractor, laborer, supplier, or other person or entity who helps to improve your property, but is not paid for his or her work or supplies, has a right to place a lien on your home, land, or property where the work was performed and to sue you in court to obtain payment.
To preserve their rights to file a claim or lien against your property, certain claimants such as subcontractors or materials suppliers are each required to provide you with a document called a ďPreliminary Notice.Ē
Contractors and laborers who contract with owners directly do not have to provide such notice since you are aware of their existence as an owner. A preliminary notice is not a lien against your property. Itís purpose is to notify you of persons or entities that may have a right to file a lien against your property if they are not paid. In order to perfect their lien rights, a contractor, subcontractor, supplier, or laborer must file a mechanicís lien with the county recorder which then becomes a recorded lien against your property. Generally, the maximum time allowed for filing a mechanicís lien against your property is 90 days after substantial completion of your project.
When the texture was completed on the inside of the new addition, the GC requested final payment through email, and I responded with a reasonable punchlist to be completed before final 10% retention was paid. Here is his response."
"My patience has just reached an end here. We did a great job on your house for a great price. The law says that final payment is due upon substantial completion, and substantial completion is defined as the work being finished to a point where it can be used for it's intended use. We have met that condition and have been beyond that point for a long time. We will do nothing until we get paid, and you will hear from the county by the end of the week. I will put a mechanics lien on your home today. As far as your claims of damage, I will claim damages as well on my lien with all the problems you have caused me during this whole project. These problems include this email coming in at the 11th hour, when I have jumped through hoops to get paid and complete the work to your satisfaction."
I just want my house done. I want it looking how it did before the construction. Is this too much to ask? The GC was paid each and every time he requested payment on the spot. This is not a money issue.
the only tangible damage of your descriptions our of "All grass is dead in backyard from storing all the drywall, stucco, roofing materials and trash for 2 months, chips in my new pergo from falling tools and sloppy nail placement, testure overspray on the carpet, drywall gaps between carpet and edges of stairway steps, stucco is sloppy, and the list goes on."
grass damage, (provided it won't be live again forever)
chips in my new pergo from falling tools
all others can only be categorized as poor workmanship, for that I don't think you can claim anything... as there is a always a tolerance which is quite large for all works... unless it is so rediculars poor workmanship such as a large uncleanable spot or somthing of dirty spots on your carpet...
for those tangible damage, with pictures and proof, you can still take the contractor to small claim court for some money, I doubt it will be 4000 dollars though..
I hate your situation. We recently had our basement waterproofed by a national company. We didn't sign a contract for the work. They don't do that. They don't require any up front payment either. They just state you pay for the job when you are satisfied. They explain in detail what they will do, what the job will be like when finished, what they will clean up and what they won't.
Well, the messed up our stucco busting through the wall, their suggestion was to patch it with concrete. My suggestion was to have a stucco repair person come over. When I got an estimate for repair, guy said I don't come out for minimum of less than a days pay or $800. Said this repair is 1/3 rd of a day. I told the company, look, i happen to need other stucco work done, you pay the 1/3 day i'll cover the 2/3rd and I'll sign the contract.
That's what happened, once I got my measly $260 something check i signed the contract for $8500 with the waterproofing company.
Now the difference between my story and yours is that 2 honest people were doing business. I could always stiff them and not pay but then they would just put a lien on my house and get paid anyways. They could alwyas do a half assed job, but then I would never pay. Works perfect. They do a good job and I pay.
Now what I liked so much, was the multitude of folks at that company who were concerned that I was satisfied, which wasn't hard, do what you said you would do, and I'm satisfied. They did.
I realize not all companies can float the entire cost of the job. And I realize that the contractors on this sight, most likely are off the highest grade, but the ones out there that don't even recognize their own bad work suck. They should DIAF. That's how our roofing company was. Took 4 weeks to finish a roof. 4 weeks!?!
Sorry for the offtopic rant.
Don't pay until you are satisfied or he'll never fix it. But you need to talk in person at your house with him. If you can't convince him to make it right you are screwed.
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