BRRRR Legal Tip: Limit Surprises by Requiring an Inspection of Contractor Work Before Final Payment

BRRRR Legal Tip: Limit Surprises by Requiring an Inspection of Contractor Work Before Final Payment

The Issue we Face:

Someone needs to decide when the rehab work on your next BRRRR is complete and payment is owed.  Make sure that that discretion lies in your hands, not that of your contractor.  Their opinion of “completed work” could be very different than yours.

Solution:

Language in my construction agreements . . . I include what is called a “reasonable completion clause” to put the power in my hands to determine when payment is actually owed.

Reasonable completion clause:  “Payment.  [Final] Payment shall only be made following an inspection of the work contracted for by the Customer and only upon determination by the Customer that the work has been completed to their reasonable satisfaction.”

Why is this important?

Financial Impact:

    • It is too easy for a contractor to “think they are done” if this decision is left to them
    • It can cost you a lot of money to fight about this after the fact
    • It puts me in a stronger position legally because I control whether the contract has been complied with.  Watch the Video Above.

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