How much holdback on construction?

[TheOtherMe]

Advice please:

I've never done anything like remodel a bathroom.  Everything is finished except for the installation of the shower door.

I received the final invoice from the contractor.  When we talked last week, he didn't seem to understand why I said I was doing a holdback for the shower door.  Actually, I don't think he wanted me to do that. s

The amount he suggested for the holdback is $1500 lower than the cost of the shower door.  In my accountant's mind, I think I should holdback the entire cost of the shower door, including installation.  That was outlined in the bid so I know the exact amount.  

I see this as my only leverage to insure the shower door is installed properly.

YM, please tell me if I am wrong.  My go to friend in Colorado is very ill and is probably dying.  I can no longer call him with these types of questions, so I'm turning to you.

[NoNamePerson]

You may have to check your state laws regarding retainage withheld. It varies from state to state and some some states have no laws!! Just a thought. I'm surprised that the contractor is questioning this. The last house I built (long ago) I withheld retainage until I saw invoices that all the vendors the contractor used had been paid. Didn't want any funky liens showing up down the line. 

[bean29]

It has been a long time since I had a job with retainage.  I think it is usually 10%.  If the door has not arrived, idk - If your contractor has paid for it, I can see why he wants you to pay for it.  How much would you be holding if you hold 10% of the entire job?  Is that about what the door installation is worth?

I don't think shower doors are that complicated-so once it comes in, I would think you will not have any issues with the installation.  

The retainage is your leverage to get him to come back rather than prioritize another job over yours.  

[CCL]

I'd probably go with them 10% of total job or 50% of the shower door. I think it needs to be enough to motivate the guy. A couple hundred dollars probably won't do it.

You are nicer than me, but I'd point out to him you've already waited almost a year on him. He can get it together and get things moving on the shower door or he can wait on final payment.

[wvugurl26]

It appears there is no set percentage for private projects in Iowa. The public percentage is 5%. I definitely wouldn't pay it all but I can see why the contractor wants to get paid as much as possible. If my memory is right the contractor has done his part and just needs the shower door installer to come.

Could you split the $1500 difference? With there being no law in your state and I'm assuming it's not in the contract, it's a negotiation.

[ArchietheDragon]

Nov 22, 2022 10:36:30 GMT -5 TheOtherMe said:

Advice please:

I've never done anything like remodel a bathroom.  Everything is finished except for the installation of the shower door.

I received the final invoice from the contractor.  When we talked last week, he didn't seem to understand why I said I was doing a holdback for the shower door.  Actually, I don't think he wanted me to do that. s

The amount he suggested for the holdback is $1500 lower than the cost of the shower door.  In my accountant's mind, I think I should holdback the entire cost of the shower door, including installation.  That was outlined in the bid so I know the exact amount.  

I see this as my only leverage to insure the shower door is installed properly.

YM, please tell me if I am wrong.  My go to friend in Colorado is very ill and is probably dying.  I can no longer call him with these types of questions, so I'm turning to you.

She who has the cash has the power. Don't give that up.

You should not pay for the door or installation. (if the contractor wants to prove to you that they already bought the door and you want to reimburse, that could be ok).

You should also hold back an additional amount to make sure everything is finished correctly.

Don't let them bully you into paying.

[TheOtherMe]

Thanks you for the advice.  

He suggested the first holdback amount and it was large for what needed to be done.

I will round the holdback down to the nearest round amount and then write a letter to him with the check.

So far, everything has been okay.  When he came back to install the piece that we waited 9 months on, he fixed a couple of things I didn't like.  

As far as I can tell, everything is working.  I should go to the basement to make sure there is no water down there before I write the check

[TheOtherMe]

The shower door has no warranty if it is not installed by the company that made it.  That's another reason I want some leverage.

Everyone is very aware that I've been waiting since February.  I thought he would haul away the boxes, but I have a garage full of boxes to be broken down and recycled.  It will take at least the entire winter to get rid of the boxes because I can only recycle every other week and it has to fit in the bin or they will not take it.

[finnime]

TheOtherMe, have them haul away the boxes, too. They are equipped to do that. And retaining part of what you owe him makes sense to me, maybe split the difference like WVUgirl suggested. Archie's right, it is your leverage to ensure a good job completed sooner.

[debthaven]

I would think that removing the boxes is part of clean-up. It's not right that he left them all for you to deal with.

[Ryan]

I never really thought about it a %, but when I did a big remodel/addition several years ago, we paid a deposit upfront but after that it was all at the completion of work.  The milestones were all laid out, but the final check was not cut until all work was complete.  There was also a small amount retained for punch list items, but it wasn't too much.

I wouldn't pay them in full though until it's complete.

[TheOtherMe]

I split the difference on the $1500 and put it in the mail.

I don't know what to do about the boxes.  The tile guy took all of the ones that had tiles in them.

[wvugurl26]

Any drop off recycling sites? I know it's pretty rural but my dad has one and he's in the sticks.

[TheOtherMe]

Not that I know about

[laterbloomer]

Nov 22, 2022 18:28:15 GMT -5 TheOtherMe said:

I split the difference on the $1500 and put it in the mail.

I don't know what to do about the boxes.  The tile guy took all of the ones that had tiles in them.

Remind him that cleanup is part of the job and the boxes are sitting in your garage.

[TheOtherMe]

Check is already in the mail and I didn't mention that.  

I did get him to get rid of a mirror and the old sink that he thought I should get rid of.  Those would have been more difficult for me than boxes.

[countrygirl2]

Usually the holdback is 10%, then you can release down to 5%. For commercial work we had material and labor releases signed. That was to ensure any subs and materials were paid for. Doubt if you need to go that route. Just the 10% till you get any items outstanding completed, then pay them the remainder.  If you have items needing corrected or completed, that is considered a punch list and the contractor fixes those to  your satisfaction.