All your percents don't add up to 100%. I just built an addition (shell only) in northern Middlesex county and paid

5% deposit
15% Start up (foundation)
20% Frame up
20% Door/Windows complete
20% Siding up
20% Final

Since I only had the contractor put up the shell, I don't know if it's typical to have payment broken down into smaller pieces for trim, etc. Where in NJ are you located?

First question is....who told you NJ "law" allows you to withhold only the value of the remaining work to be done?

Touch-up work + Final payment = 2% of contract value. I don't know the value of your addition, but where I am, 10% holdback upon project completion is standard. I would withhold 10% at the "touch-up" phase since this is the most difficult to get them back usually. THEN payment in full of any remainder.

Either way, if your contractor is local and HIGHLY recommended, you might consider dropping that to his requested rate but MANDATE a fixed completion date or added penalty cause for delay in your contract, which would negate any foot dragging.

Either way, limit as much as humanly possible any site changes during construction and you can insist that a set completion date be added to the contract. This should make both of you feel better, as you have the commitment of the builder to get it done by x date, while you have the ease of mind knowing you can pay and your project will be done on time.

If it's not completed by deadline....then don't pay. Simple as that. And you wouldn't be in violation of NJ law since the work hasn't been completed.

Hire a lawyer to look over the contract with the builder.

It is good to know that what we are asking for is reasonable.

Dopeonplastic, there are 14 other items there, such as "Roof complete", "Interior Frame Complete", "Siding work begins", "Siding and windows complete", A/C work etc. Each marked as either 4% or 6% (with the exception of 8% after windows and siding is complete which I think is ok). We are in Northern NJ. Did your contract include any language like "Only the $ amount of the incomplete work may be withheld..." ?

Loralee, thank you for the advice to have a completion date and as little changes as possible. We will be adding to an old house and doing a lot of remodeling of the original house, while also living here with our two kids, so it may be hard to specify a date of completion but we will certainly try to put some limit. But that is also subject to inclement weather, inspection delays, change orders etc. How would you word such a clause?

annab6

There is no way to force the contractor to finish by a certain date except by using a "liquidated damages" clause which are hard to enforce and would probably be impossible to enforce for the type of project you describe. Getting the GC to promise a finish date in writing only gives you the ability to complain later when he misses the deadline, nothing more. If he stops working altogether, of course, you could fire him and hire another contractor although this is usually an expensive and painful option.

In addition to the payment schedule, a "Withholding" % is sometimes subtracted from each payment. It represents basically half or so of the GC's profit. Toward the end of the job the "Withholding" would be gradually reduced according to a predetermined schedule until it is gone at the final payment.

To answer your original question: the final payment always represents 100% of the final contract amount. That's the definition of a Final Payment.

What kind of contract are you using, something written by the contractor? It is usually not wise to use contracts cobbled together from different sources with provisions and wording that have not been tested by the courts in your state. There are standard, well tested forms available from a number of companies and professional organizations. A good contractor should be using one of them.

A construction contract is not a good do-it-yourself project. There's far too much money riding on it.

mightyanvil,

The contract template is the same as the contractor is using with his other clients, supposely reviewed by his attorney (not sure how long ago that review took place).

As far as the NJ law, I called Consumer Affairs office and sure enough there is no such regulation.

Unfortunately, we may be stuck on this one. I am very upset, we like his work and want to have good working relationship with him. And here we have a disagreement over the contract terms before the project even started.

But here is another question. Is it as bad as it appears to be?

In addition to the payment schedule, the contract says exactly this: "If any portion of work remains incomplete only the dollar value amount of the incomplete work may be withheld until that work is completed".

The way it was explained to me is, for example, if there are five tiles left undone in a bathroom because we ran out of material, we still have to pay for the tile work except for the five tiles. Of couse not what we want to hear. However, I wonder, if we do sign the contract which includes these terms, is this how we have to interpret it? I would like to interpret it in the above example as "bathroom renovation is not complete" instead of "five tiles not installed".

And my objective is not to make him complete by certain date which I know would be impossible, but to prevent a situation when we have a bunch of items to be finished all over the house and he doesn't show up for days or weeks.

Agh...

Thanks
annab

"The contract template is the same as the contractor is using with his other clients, supposely reviewed by his attorney (not sure how long ago that review took place)."

He is using a lawyer. You need to use one as well. Some of us here are lawyers, but not in your state, and we haven't see the contract. I can only imagine what a custom house in NJ costs, but I bet it is enought to spend $500 on a lawyer to look over the contract. I don't mean to be sarcastic, but you don't know how many people on here post with questions like this. Or worse, after the fact they learned they signed a bad contract and now they are screwed.

Please, it's worth the money.