When do you have to pay final payment to contractor?

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.

What happens when you get slow payment from a contractor?

Contractors experiencing slow payment or other payment problems usually start ringing their customer’s phone, and they hear some version of “it’s coming soon.” There’s the infamous “the check is in the mail” excuse that happens in all industries.

How to collect final payment on construction project?

See how you can use Levelset. The final payment on a construction project can be one of the toughest to collect, and it usually takes the longest. Every T has to be crossed, and every I dotted.

Do you need a certificate of occupancy before releasing payment?

That still leaves room for disagreement, but if all parties are reasonable, there should not be a problem. And having the certificate of occupancy is required to legally move in, so you want that nailed down before releasing payment. In general the CO is issued to the builder or entity that applied for the building permit.

What happens when a contractor refuses to pay?

When a contractor refuses to pay subcontractor, the subcontractor has grounds to pursue legal action to collect the money that is owed to them.

See how you can use Levelset. The final payment on a construction project can be one of the toughest to collect, and it usually takes the longest. Every T has to be crossed, and every I dotted.

Can a homeowner refuse to pay a progress payment?

“Progress payments … are helpful to contracting operations of all sizes, but especially [for] smaller businesses, to minimize the potential for a homeowner to refuse to pay after work has been done at your expense.”

What do I need to turn in for final payment?

Most prime contracts, or the contract between the owner and the general contractor, will stipulate the documents that need to be turned in and completed before final payment is released. The bank or financing company for the project may have their own list, as well.

When do prime contractors have to pay subcontractors?

In regard to the US Prompt Payment Act, the requirement states that prime contractors must pay subcontractors for “satisfactory” performance within seven days of receipt of payment. Satisfactory is a relative term and can be the cause of disputes.

What should a contractor know about final payment?

All contractors, whether a general contractor or subcontractor, should read their contract documents carefully so you know what has to happen or what documents need to be turned in before final payment is released.

Can a contractor file a final payment lien?

Contractors can protect themselves by following a final payment checklist. Always protect your right to file a lien, no matter how strong you think your contract is. Filing a mechanics lien is one of the most powerful tools you have to get paid on a construction project.

What are the final payment clauses in the AIA A401?

If you are a subcontractor on a project using the AIA A401 Standard Form of Agreement Between Contractor and Subcontractor, you may wonder what the clauses about final payments mean. When do you have to submit your final payment application? When do you get your retainage? Can you make any changes to the contract to get paid faster?