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Question DetailsAsked on 1/23/2018

For California (CSLB), when should I pay for the completion of a milestone?

My contractor has a payment schedule. He told me to pay "Completion of Framing" or "Completion of Plumbing" and I did. However, the framing and plumbing both failed inspection repeatedly, and he won't continue with the project. In CA, does the consumer pay for completion after it has passed inspection, or can a contractor demand payment without passing inspection? Since I already paid him for framing completion, is the contractor obligated to get me to pass City inspection? What recourse do I have since he refused to do any more work.

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Not sure why you referenced CLSB, but makes no difference probably. Presumably you mean he has a General Building Contractor's License from the CSLB. Here is a link to the CSLB general guide on home improvement/construction contracts - which might or might not help you, but it spells out certain requirements - you may find his contract did not contain all the required elements so that may weaken his case too, possibly (in the extreme case) to the point of him not legally being able to receive ANY payment under the contract.

He can "request" payment of progress payments whenever he wants once the materials are delivered (for materials payments) or when he states the work is "done" (for progress or completion payments) - though might not be legitimate to do so depending on the definiton of "done", and there is the hangup because they do not define "done". He can argue the "work" is done, just not the "inspection" which is something "he" does not do - the city or county does that so he can argue that is not part of his "work". I would say nice try but no kewpie doll to him to that argument on his part, but he may argue that. Sort of comes down to a Bill Cinton definition of "is" thing, and it is a flaw that the law does not spell that out - though the building code does imply that construction/repair work includes passing any required inspections.

It is up to you as the customer to determine if he is actually due the payment at the time of presentation of the bill or not - and to me a phase is not "done" till everything is complete under the plans and specs, per building codes and building regulations - and the latter require those inspections be passed to obtain an occupancy permit, so failed inspection = substandard hence incomplete work. Certainly ANYTHING within his scope of work which is not accepted by the building inspector causes the prject to be incomplete because it is not legal and you cannot obtain an occupancy permit without passing inspections - so by definition I would say that constitutes an incomplete job performance.

But making the payment when the work was not complete (or essentially complete with perhaps a minor punchlist of to-be-completed items before final project payment) puts you in a bad place - not only from having less hold over him because you already paid before the work was "done", plus he can use that payment as an implied acceptance of the work. Fortunately, they failed inspection so that greatly strengthens your case.

Certainly, if an inspection is legally required at a phase like those two, the work is not "complete" until it passes inspection, and you should not have paid until they passed final inspection. Whether he can legally demand payment before that time is a legal issue a lawyer would have to elucidate on - I would suspect he can "ask" for the payment legally before it passes, but might not be in a good legal position if he for instance filed a lien demanding payment before inspection is passed.

If he refuses to do any more work, unless you have that in writing from him, I would (and since this sounds like a new construction or major remodel or addition so probably a lot of bucks involved in the project) I would have an attorney do a letter to him stating the inspections which have been failed, and that you are demanding he rectify the work to a workmanlike and code-compliant manner and receive a passing inspection on those work items, then move to completion on the job immediately. Getting a refusal to complete the job in writing from him would carry a lot of weight, given the failed inspections. And all communications with him establishing any position or changes from now on should be in writing - correspondence or signed change order or whatever.

While you could then sue for breach of contract, your best next step would likely be filing a formal complaint with the state licensing board about his refusal to bring the work up to passsing inspection (which does not get you any specific remedy but puts his license at risks so puts a LOT of pressure on him to make the complaint go away), and also work with your attorney to forestall any lien attempt (he has to file a 20 day 'intent to file lien" notice with you before he can do that) and to file a claim against his Bond to get the bonding company to get the work corrected and the job finished by another General contractor at the same original contracted total out-of-pocket from you. (They can then move against him to recover any costs they incur above and beyond whatever amount you would have still owed on the original contract). He was bonded, right ? (Though if not that would also be a state law violation against him unless his job is less than - oh, what is it - $1000 or so as I recall in California, but don't hold me to that.

If he is not bonded (a big mistake on your part) your attorney might still be able to go after his contraxtor general liability insurance on the legal basis of contract breach or fraud - but a lot tougher than calling his Bond.

FYI - here are links to several similar questions with answers about contractors refusing or failing to complete work -

Good luck

Answered 2 years ago by LCD

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