Confused about Final Payment Application

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3 comments

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    Joel Edwards

    Substantial Completion is the term used in construction contracts to describe the stage in which the work is sufficiently complete so that the owner can occupy or utilize the building for its intended use, in spite of some things that might need to be completed or corrected. At this point, the Contractor can submit an application to be paid, plus retainage, but will most likely not receive ALL of the money in the application due to pending punch list items and ongoing work that did not hold up use of the building.

    Final completion is the stage in which a contractor is entitled to final payment given that all work has been fulfilled. This is when the remaining balance of the contact amount is due to the Contractor.

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    Dana Evans

    Thanks Joel!

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    Fernando Mingo Jozami

    AIA Doc A101 2017: states in 5.1.7.3 "...upon Substantial Completion of the Work, the Contractor may submit an Application for Payment that includes the retainage withheld from prior Applications for Payment...."

    Hi

    I advise you to review AIA A-201 General Conditions for the construction contract. It has plenty of information regarding how and if retainage is paid back to the contractor.

    Look for article 9.8.5: This provision contemplates full release of the retainage at SC except for that portion of work incomplete or not in accordance with the CDSs. In order to release the retainage, the contractor must obtain consent from its surety. 

    When the contractor considers that he has completed all pending items included in the certificate of substantial completion, he then gives the architect notice that the work is ready for a final inspection. This typically comes with an application for payment by which the contractor intends to cash in all remaining monies. (9.10)

     

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