Can customer withhold money until the project is satisfactory completed? If yes, how much can they withhold.
The laws may vary by province, but I imagine 10% is a fair for a maximum figure. I.e on small jobs 10%, but on bigger jobs that hold back may go down to 5% then 3%.... I have also seen a small hold back held for one year, the duration of the waranty. This was on a $1.5M commercial project and interest was paid on the hold back. This was all specified in the tender documents. I don't know if a home owner could do this on a residential job.
When a customer offers to pay me in full when the job is not 100% complete, I always politely decline. When you are owed money, it maintaines the incentive to get back there and wrap up the job.
I don't know about the laws in Calgary but I do know about Ontario.
Technically the client is suppose to withhold 10% every invoice. It's get released 45 days after the project is completed. 45 days is because all workers, suppliers and sub-trades have 45 days after the project is complete to put a lien on the property if they haven'tnt been paid.
And depending on the size of your project you should be asking your contractor to supply you with a statutory odeclarationon after the second invoice aneveryoneon after that. This letter imeantnt to certify that the contractor has paid his/her subs and it shows the courts that you as a client have done you diligencece.
Regards,
Mike
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