Final inspection-how important to owner?
How important is getting a final inspection to me as a homeowner? A recent renovation is largely finished; a few items remain to be completed before the plumber and electrician can get final inspections. Should I care about this as a homeowner? If I go ahead and pay the GC before the final is issued, what are the possible implications?
Replies
I wouldn't pay the gc until everything was inspected and done. Depends on your locality, of course, but around here the Mechanics Lien act requires you to hold back 15% for 60 days to ensure that no liens are filed, or, if they are, the money is there to pay them.
Also, if you make the final payment, are you certain that everything will be finished? Totally depends on the contractor you are dealing with; no one here at BT would wander off leaving the job unfinished, but I've heard there are people who do!!!!
Yeah, always hold back something until final inspection is done. The amount is up to your judgement (and the contract), but should be enough to get the contractor's "attention". In complex cases it should be enough to cover repairs by a 3rd party, if necessary.
Of course, none of this will replace having a contractor you can trust.
now I would never expect being paid before I finish the job except in certian situitations like, little things like knobs and draw pulls because the home owner didnt make up there mind till the job was almost done and its time to go to the next job . so in a situation like this I submit the bill, expect to get paid, and say ill return as soon as they call me when they come in , and I always do. even if I have to go do somthing like that after hours .
now if the roofers aren't done then thats different story, unless I am paying them or the homeowners are.
dogboy
Doesn't your contract state something about a retention or punch list holdback? You should have a few percent held back at punchlist time, unless the punchlist includes things like siding the exterior or putting the roof back on! But it really depends on your contract. Most GCs aren't going to wait 60 days for 15%.
Final inspection is important. You want the records relating to your property signed off and done in the town's files. If the GC pulled the permit then there may be a requirement that he file a notice of completion with them, which means the final has to be done. If you pulled the permit, call for the inspection. If the inspector finds something major, then you'll be glad you've held back some dough.
Regarding mechanic's liens, what you really want is a release of lien by each sub who worked on the job (materials suppliers also). That says they've been paid and it removes their rights to lien your property. If your GC has not been collecting these as he pays the subs then he's making a big mistake. These docs need to be signed by a principal in the company, not by the office manager.
Around here, by law, the mechanics lien holdback is 15%. And it is to be held for 60 days after closing. If you don't, the law considers that you have, so if any subs haven't been paid, you owe 15%. Even if you paid the gc in full. This holdback has nothing to do with money held to guarantee the contractor finishes the job. Although it generally is used that way.
I find it interesting when others say that no gc will accept a 15% holdback for 60 days, but here it is the law. Some contractors will get you to go around that, but most accept it, since it is the law. It just works out to a few points on the line of credit anyway. If you as a contractor can't finance the 15% for 60 days, and add that financing into the cost of the job, how are you staying in business?
The best approach is to get lien releases when you pay people for their work. Some guys can finance part or all of a job, and some can't. I'll loan money if I'm paid for doing so.
"if you're paid to do so"...that's what I meant; if you know the rules, and build it into the cost of the job, then......
How do people handle not just subs (as in trades), but suppliers? Do you ever have to supply a lien release showing that, say, the trusses have been paid for? The lumber? Assuming that most businesses operate on a net30 day payment schedule, how do you work that?
It's up to the GC or owner to get lien releases. A lumber yard or truss manuf. will sign one if you give them the form filled out along with their check. Unless you ask you'll never see a single one. A good GC should have his/her own lien release form and have the sub (or whoever) sign with every payment (partial lien release is partial payment....)
I don't see it as a business thing. The fact is that the laws are different in different places. Some states only allow a lien to be filed within a narrow window. I believe that in Colorado, it was that it must be filed within thirty days after last work was performed and the job invoiced.
This points out how it is important to know the lawds in the state you do business, becaused what is required in one would void your rights in another. Suppose that I misseed the 30 window to file on a job in CO. Then I would need to wait until ninety days with no payment activity had passed before I could take them to small claims court - or file a suit for major damages.
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Up here (just up the coast from you), that window is 60 days from the last day that services were performed or goods supplied....that's why I mentioned the net 30 day payment terms that most business works on....if you are a supplier or a sub, and you let someone go too far over on payments, you lose your chance to file a lien...as you said, it's important to know, and understand, the laws in the area you work. Most homeowners around here don't understand the liens act, and they can easily get burned.
The work is'nt done until inspections are complete and GC does'nt get final payment until the work is done.
Sometimes the contract payment schedule can be a little off leaving the GC short after paying his expenses. Giving him a partial payment is up to you. The more you give him the less incentive he has to finish up.
Final inspection and Certificate of Occupancy are absolutely necessary in order to sell the house. Not getting a C of O sets you up for a real nasty surprise years out in the future.
-- J.S.