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ConstructionPro Week, Volume: Construction Advisor Today - Issue: 47 - 03/18/2010

Should Final Payment Requirements Be Strictly Enforced?

When a contractor completes a project and is ready to receive final payment, there is more involved than an inspection and approval of the work itself. Construction contracts typically require submission of extensive documentation: affidavits, proof of payment, lien waivers, warranty information, record drawings, consent of surety, etc.

The detailed nature of the final payment procedure gives rise to a question. Must a contractor strictly comply with the application requirements in order to be legally entitled to the contract balance? A Pennsylvania court recently answered in the affirmative.

 

The contractor in the Pennsylvania case acknowledged it had not submitted a proper application for final payment. But the contractor alleged an owner’s representative had said final payment would not be forthcoming unless the contractor dropped outstanding claims for extra work. The contractor said the application would have been pointless and the owner was hiding behind the technicalities of the payment clause. The court ruled, however, that compliance with the requirements for application for final payment was a condition precedent to entitlement to the contract balance.

 

As always, I welcome your comments. The project owner has a legitimate need for this documentation, so should the requirement be strictly enforced? Or, do project owners manipulate the application process to delay final payment and gain leverage over outstanding claims?

Featured in next week's Construction Claims Advisor . . .

  • Maryland Court Addresses No-Damage-For-Delay Clause
  • Supplier Loses Payment Bond Rights by Concealing Progress Payment Diversion
  • Wage Violation Penalties Were Mandatory

 

 

Bruce Jervis, Editor
Construction Claims Advisor

 

 

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