How to Snag that Final Payment

Dan Bawden offers tips for remodelers wanting to get their last payments on time from clients.

June 30, 1999

Clients often want to hold out major portions of the project’s payment to ensure loyal attendance and attention by the remodeler until the job is done. Bawden suggests two contract clauses to make sure there’s no confusion on when the job’s done:

 

  • Maximum hold-out. The client may hold off paying the final 5 percent of the project’s total pending the Substantial Completion point, defined as when the punchlist of details to be completed is compiled. This guarantees that they never have to pay 100 percent of the cost before everything has been resolved, regardless of any delays that pushed payments ahead of the activity completion.

     

  • Percentage hold-out. Once the punchlist is complete and only minor finishes are left, Bawden estimates the time required to perform each activity. The client can withhold 150 percent of the cost of each item, but they must pay the balance. "That ensures they can’t hold me hostage for a significant payment because several small items aren’t finished or we haven’t installed a towel rack that was ordered, but hasn’t come in yet."

This technique ties cost directly to time needed to do the work. For instance, if two downspouts need to be painted, Bawden might estimate 30 minutes to do the work. With a company hourly rate of $60, the client can withhold $45, and no more, until that work is completed.

Bawden also stresses to customers that the company’s warranty, which is part of the contract, holds the remodeler accountable for any details that arise after the payments are made. "We stress that we’ve taken care of them so far, and it won’t stop just because we’ve gotten the money," he says. "You definitely need to provide emotional support at the end."

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