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Looking for advice, withholding final payment

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Posted by: from Mississauga
7/8/2020 at 2:06:07 PM

Hi Thanks for your response in advance.

My contractor and I are trying to complete a project but we have hit a road block, there are multiple items that I would like him to complete or rectify in the original scope of work. I still owe 10% of the balance or $8000. He is suggesting that I should pay them $5000 before anything continues as most of the work is completed. I have concerns that the remaining work could cost more than remaining $8000.

He has provided me 3 options:

1. Pay him $5000, and the then the remaining balance to complete only some of the work I believe is outstanding. I cannot get him to confirm exactly what work will be completed as he says his team needs to assess whether some issues are material defects or installation errors.

2. Pay him $5000 and for me to use the remaining $3000 to fix the remaining issues

3. Go to court

I provided him an alternative option which I would like to pursue (since we can't agree on the work that should be fixed or not fixed related to the scope of work). Hire other contractors to complete the work. After all work is completed sit down and reconcile the invoices with the remaining balance and settle any money owed. I have no problem with his team completing the work, but it seems like they only want to complete parts of it.

For Context here is what I need to still get fixed:

- Damaged and poorly installed brand new doors

- Chipped tiles, poor grouting, resolve tiles that move.

- Replace trim pieces on brand new installs because of scratches that 4-8 inches

- Repair hardwood which was chipped during installation- remove or repair exposed nails and staples.

- Plumbing reinstall laundry plumbing fixtures that were removed even though they were not part of the scope of work.

- Electrical, get an ESA certification, repair and install work that has not been completed

- Get final permit approval for building changes. (The work as per written communication was to be done through permits and approvals from the city of Mississauga and the ESA, and the permits in the communication were the responsibility of the contractor to obtain) (all walls are closed)

Am I okay to withhold the funds for the time being to get the other work finished? Is there anything I need to consider with taking this course of action?

REPLIES (6)
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Austin in Winnipeg
Date/Time7/8/2020 at 3:06:01 PM

I'd either sit down with the contractor and explain you've already paid for said work to be done. That before any more money is sent work must be almost all completed. If they don't agree to that then take them to court.

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Date/Time7/8/2020 at 4:34:46 PM

I would demand a list from the contractor of items he is will to fix....

And you produce your own list and then sit down with your contractor itemize and come up with a pay schedule as things get completed to your satisfaction.

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Date/Time7/8/2020 at 4:58:41 PM

1) Make a list of said items that need to be fixed. You and the contractor both sign off on those items to be fixed.

2) which is more concerning, make sure all inspections have been completed and passed with the city and ESA. This will be a very big headache for you later on. Especially if you wish to sell the house.

3) I don't know why work continued or items weren't repaired upon noticing them.

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Date/Time7/8/2020 at 10:28:49 PM

Make sure to document all of the work you want to be fixed. As in take a lot of pictures of the work you aren't satisfied with because that will help if you do end up going to court because the work wasn't properly completed.

I would not pay him until you both have come to an agreement and have a signed contract of what needs to be done.

Also I would recommend contacting the esa and the city about the permits for the address that the project is and make sure he has actually pulled permits for your job.

I hope this helps!

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Steve from OMC Contracting in Kitchener
Date/Time7/8/2020 at 11:55:27 PM

Make a list of deficiency and sand it to Him c/w time You want Him to finish it,give Him 30 days to complete, if Hi doesn't finish it for that time hire other contractor to finish it and make sure You receive written bill from second Contractor and that will protect You if He decide to take You to Court.Bottom line is don't release any money and make sure You have a record for everything.

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Chris from KP Construction in Toronto
Date/Time7/9/2020 at 3:40:34 PM

Keeping my answer short:

1. You are entitled to keep 10% as a hold back until the project is "substantially complete" (if that is worked into your contract)

2. "Substantial Completion" is generally defined as a project that is 97% complete in terms of financing and functional in terms of performance. Also, all close out documents including ESA inspections need to be complete before the contractor can request the hold back.

3. Once substantial completion is achieved, you may ask the contractor to provide you with a project notice filing in the commercial daily news. This protects you from his subcontractors liening the property in the case they have not been paid.

4. Once these steps are done, you have 45 days to pay the holdback.

5. If there are still deficiencies but substantial completion has been achieved, you can withhold a deficiency amount (equal to the value of the work to rectify deficiencies).

6. If substantial completion has not been achieved, you do not have to release the holdback and can hold the contract in default and retain another contractor to complete the work or retain the sub-contractors directly. Although this can get messy.

Hope this helps. Please note that this advise is not legal advice and only my opinion. If you are concerned you can and should contact a lawyer well versed in construction law.

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