Witholding Certificate of Occupancy As Leverage to Get Paid - Contractor Talk - Professional Construction and Remodeling Forum

Contractor Jack · 09-25-2009, 12:32 PM

Is it legal to withold the Certificate of Occupancy from a non-paying home owner as collateral to encourage them to pay up? Might be a quick and easy way to get final payment from an unscroupulous client, rather than going through the hassle of processing a Mechanics Lien.

I'm guessing the answer is "no". They could probably just go and get a copy from the building inspection department, but I've heard that it would be a huge PITA for them to do so.

RizzoMaryland · 09-25-2009, 01:05 PM

In my area, the paper certificate doesn't mean squat. It's all on file at the county. So i guess it all depends on if the HO knows that or not.

kjm_rebuild · 09-28-2009, 01:23 PM

The only time it would be leverage is if you with hold work so as you/they cannot get a Cert of Occ. Would only be useful, if you didn't get your next to last draw.

Otherwise, if you complete the work, I'm sure the buiding dept would just give them one.

File the lien. Add a clause in your work auth that stipulates that in the event you are not paid at completion within X days (maybe 10 or what ever you want) a lien will be filed and the expenses to do so may be added to the amount of the contract.

**genecarp** · 09-28-2009, 01:29 PM

The CO can be leverage, physcological at best, now the electrical underwriters, thats real leverage. G

Mitch M · 09-28-2009, 04:30 PM

I had a client who was very slow in paying. He ended up filing bankruptcy later but just as this started getting out, I had just about finished a project. All of the other inspections had been finalized. All I needed was the building final and then we would get CO. To this date I still have called. He mentions it every now and then but I stand fast.

We are going to court shortly so I am going to hold that over his head. However, keep in mind once you have called for CO there is no leverage left. I did finish up a couple of otehr houses and had the CO. It just needed carpet and some punch list items. He hired someone else to finish that part and got it rented out.