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I live in Colorado and purchased a summer cottage in N.H.

I hired a gentleman to do the foundation and a general contractor to do the rest, I paid the foundation guy half down and 1/3 when the project was started. The Foundation guy did shoddy work. The town building inspector said he did the foundation wrong and wanted it repaired before letting my general contract start. He held up the whole project 3 weeks and still has not fix all the problems. He is threatening me with a lien and says he is finished and wants the balance I owe. Can I withhold the balance until the project is done and the building inspector give me a clear go ahead?

1 reply

Jan 3, 2020

Unfortunately, I'm not sure that there's a simple black and white answer to give you here. Certainly, if a contractor's workmanship is unacceptable and if the work won't pass inspection, it makes sense that an owner would want to withhold payment until the work is repaired. At the same time, it's also possible for a contractor to file a mechanics lien even if their work is in dispute or even if the amount they're owed is in dispute. That doesn't automatically mean the lien claim will be valid and enforceable, but an owner claiming the work was improperly done won't block a lien claim from attaching to the property. Rather, the dispute would likely end up being litigated to determine what is owed under the circumstances. So, withholding payment may be warranted but it also could spur a claim. Still, if an owner is going to withhold payment from their contractor, it'd be wise to put the reasoning for withholding payment in writing, and it would also be wise to provide steps the contractor can take to obtain full payment. And, if there are any terms in the contract regarding how withholding should be managed, or if there's anything in the contract regarding defects or workmanship, the contract terms should be followed as closely as possible. Further, it'd also likely be a good idea to include any relevant documentation (like copies of the inspection results and photographs of relevant issues) with the notice that payment is being withheld.

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