Remodeling: Remaining In Control With Retainers
Including a final retainer clause provides you with additional protection. Retainer clauses allow you to retain an agreed upon amount for 2 weeks or up to 30 days after the project is complete. The retainer amount is typically 5% to 10% of the final draw amount or payment made to the contractor. It is also tied into the “punch list” which allows the contractor to fix or complete any items as per the contract. Additionally, it gives the homeowner a break-in period to test and use items such as the HVAC, faucets, toilets, etc and to make any minor adjustments needed.
Once the homeowner is satisfied that all is in good working order and there are no outstanding issues, the contractor will ask you to sign a Certificate of Completion and Acceptance. By signing this form, you are agreeing to the fact that all the work has been performed to your expectations, workmanship is satisfactory and the contractual agreement between you and the contractor has been met.
For such a brief form, the consequences are great and costly should you not agree with that statement but sign anyway. Never sign any agreement like this unless you understand and agree that you are completely satisfied with the work. Your signature essentially lets the contractor off the hook and going back after the fact is a no-win for you.
For this reason, retainer clauses offer some peace of mind but they must be included in your written agreement. They should detail what you expect to be done about repairs or missing items and how they are to be handled. If for some reason the contractor refuses to correct a problem, you will at least have some money held back to hire someone else to finish the job. Now, this is a worst case scenario but it can happen and including these protective clauses will serve you in the end. But I also must include here that having collected Lien Release Waivers at every payment made to the contractor, including sub contractors and suppliers, will prevent any valid Mechanics Lien being filed against your property for lack of payment.
Construction projects have their risks but when written agreements are thoroughly detailed in the contract, remaining in control will be your ultimate reward.