Builder wants final payment before house is done

14 years ago

Unbelievable- the builder is testing my mental fortitude and the number of different ways that I can say "No." They are giving me every song and dance in the book as to why I should give them the balance due (~12% of build) before they complete their work. Furthermore they are trying to take advantage of the fact that we are young and this is a cash job- so no messing with a bank for payment.

We ironed out the punch list (which included some major issues) back in July which explains why the amount withheld is so high. Things like glazing my cabinets, refinishing the 1st floor, completing siding, fix well pump issues, final grade, install hardpack driveway, etc. About 80% of this work has been done since then, mostly in the last 2 weeks because they're been dragging their feet with our job.

Knowing that we were holding 12%, my DH and I have been wondering when they would 1) want their money and 2) finish the job. We initially thought, "Hey, guess they are loaded and don't need the money as they were in no rush to finish." After we moved in July 4th, they disappeared for 6-7 weeks or so. For your amusement, here are their various attempts at collecting payment- don't worry, we're not paying them until it is 100% done.

"All my other customers would go ahead and pay us" aka "You're mean."

"We don't want to take out a line of credit. The subs need to be paid and this isn't fair to them." aka "You're a deadbeat."

"You're holding back money while you've got us working on warranty items- meanwhile, I can't pay my guys." aka "You're manipulative."

#3 isn't true and I called them on it. I've put in writing (and copied our lawyer) the fact that the issue isn't money- it's finishing up the job. I've told them a dozen times I will write them a check the MOMENT the house is done. Furthermore, my point all along has been....if you're this slow when I owe you money, what's going to happen when I don't owe you any money and there is work left to be done????

I'm sorry if this turned into a bit of a rant...We have three painters working on some final things and I went downstairs and found one of them standing 100% on my granite peninsula. We already had to have them repaired once b/c someone stood on them- it's like they fell out of the dumb tree and hit every branch on the way down or something.

Featured Answer

macv

14 years ago

What you are withholding should essentially be the GC's profit so he should be able to pay his subs if he knows how to run a job (rare in homebuilding). If you have occupied the house and the items are becoming minor, 12% might be excessive but I don't know the amount of the contract or the work remaining. Pay it down gradually staying above what it would cost to hire someone else to finish.

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Comments (12)

alabamanicole
14 years ago
I would cover your butt in the lien department. If the GC isn't paying his subs, they could be placing liens against the house.
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iamsum
14 years ago
im not sure if you stated it in your contract, but there should have been something to the effect of "Final payment will be made after final walkthrough by owner." That way there is no dispute about when that last check should come. Ultimately if you've made every other payment until now, you're probably not gonna start cheating him out of money unless the job is done improperly, which he might be afraid of.
mdev
Original Author
14 years ago
He knows we're good for it- he's just trying to get us to make up for his disorganization and terrible time management- by paying him for a job he hasn't finished yet.

Meeting tomorrow to hash out final bill and will likely make a partial payment of the balance due.
terry_t
14 years ago
You nailed it when you said "....if you're this slow when I owe you money, what's going to happen when I don't owe you any money and there is work left to be done????"

To build on what macv said, you might want to get some independent bids on the remaining work. Use those bids to decide if the builder merits payment. Otherwise I recommend against paying anything to the builder. You could end up giving him enough where he is willing to walk away for good.
emilynewhome
14 years ago
I would also make sure to get lien releases from every sub that has worked on the house so far, before you pay him another cent!
bdpeck-charlotte
14 years ago
Talk with your lawyer about putting the money in escrow, with the punch list being what needs to be done to release the funds. The GC does the work, you sign off, he gets a check.

No matter how you approach it, stick to your guns, don't give him more money until things are done to your satisfaction.
dancingsams
14 years ago
I agree with the above - do not pay until everything is satisfactory to you. According to the materials that the state of California sent me, the contractors' board here tells homeowners to hold out 10%. That final amount is to be paid only after everything is complete, satisfactory and passed inspection (I'm paraphrasing, since I lost the pamphlet).

Also, I agree strongly regarding lien releases. If you have a loan for the work, the escrow company can check for any liens for you.
phillipeh
14 years ago
Don't do it. Our contractor has disappeared. He thinks we owe him around $10K; the way we figured it, we only owed $3K and sent him a check for that amount over a month ago -- which he still hasn't cashed. We still have a list of stuff that needs to be done, and it hasn't been touched. And these are things we brought up before we even moved in July 4. Anyway, if you give him the money now, you'll never see him again.

Don't worry about the contractor trying to pry money from you by making you feel bad, or manipulative, or a deadbeat. Ours did the same; just stick to your guns. Seems all contractors are the same. As long as you control the money, though, you have leverage.
mdev
Original Author
14 years ago
I feel like I've been to battle. A three hour meeting hashing out change orders that had been agreed upon and misc. bills that I had never seen before. Thank god we have an airtight contract.

All sorts of things cropped up- the plumber submitted a bill for a well pump which was 4x the amount quoted, the excavator threw in 17k in extra charges for good measure and the builder told me they were going to have a hard time with a few lien releases. I knew that was coming as I'd heard through the grape vine that some of the subs hadn't been paid.

Plumber threw a fit when he found out we were going to hold 5k until he fixed the water problems. Our well pump (Grundfos) has been spontaneously shutting off once every two weeks or so. I think that is how we ended up with a well pump bill way out of line with the quote....

Anyway- it's better to hear about these issues before we make a final payment. I can't wait to wrap this all up and just enjoy our new home!
michelle bryan
3 years ago
This wouldn’t happen to be Artisan Custom Homes would it? We are having the same exhausting discussions.
megstwin
2 years ago
That’s not my builder, but I’m looking at the same issue. Paying the mortgage on the house and it’s not even finished. Builder sent his final bill and is requesting payment. I think that I will let the bank release the funds for whichever subs are on his list, but withhold any money directly going to him until after I get my CO.

Builder wants final payment before house is done

macv

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