When to make the final payment? Before or after final inspedtion?

Lanjin86May 22, 2012

I will hire a contractor to replace the furnace and some AC work. He will pull the permit and we agree to pay 50% as down payment. The rest of the 50% will be paid in the end. My question is: the final payment should be paid before or after the final inspection? The contractor said that the full payment is due on the day the work in completed and it will be before the final inspection since the inspection will be scheduled for few days later. Of cause if something is wrong and it is part of the installation he will come back and fix them. Is this the common practice? He said it is their company's policy.


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I'm not an expert, but the only thing in my area that would require a permit is the electrical (if a new line is run to the outdoor unit). Replacing the blower and outdoor unit would not need a permit in my area. Hence no inspection (except the electrical). In which case they are paid when they are finished. And there should be a warranty covering both the installation and equipment..

    Bookmark   May 22, 2012 at 4:47PM
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50% DP is too much!

Who is making the final inspection and what exactly is his authority and qualifications?

I would not pay the final pmt until the inspection is made. That's the best approach for the homeowner.


    Bookmark   May 22, 2012 at 5:11PM
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Thanks weedmeister. The question is really when to make final payment - in your case, would you pay them in full before the final inspection is done when you do electrical work?

    Bookmark   May 22, 2012 at 5:11PM
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tigerdunes, they said 50% DP is for ordering equipment. Town inspector is responsible for inspection. I will request the contractor to show the permit on the day of the installation since this is by law in our area. I might have to negotiate some percentage payment hold till the inspection is done. The proposal did mention the installation will be up to the code and 2 years warranty.

    Bookmark   May 22, 2012 at 5:20PM
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In New Jersey the building codes seem to be constantly changing. One never knows whether an installaion will pass or not. The rule is the final payment is due after the township inspection. If you have complete trust in this contractor, you could pay in full. If not, then withhold some payment so you have leverge in getting any problems corrected. Schedule the inspection the day after the installation is completed.

    Bookmark   May 22, 2012 at 6:50PM
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Again 50% DP is absurd unless you are a credit risk. Something not correct about this. 25% and no more is OK.

And again, I would not make final pmt until inspection is complete and completely approved.


    Bookmark   May 22, 2012 at 7:05PM
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