How to Walk Through a Finished Job Before Final Payment

Why this matters

The final payment is the last point where you and the contractor both have a reason to finish the same list. Before it, small open items get done because the crew is still coming back. After it, they compete with every other job on the contractor's calendar. A walkthrough done properly, with a written punch list, a confirmed final inspection, the paperwork in hand and agreed dates for anything open, closes the job cleanly for both of you. A walkthrough done as a quick look on the way to writing a check is how a missing cover plate becomes a three-month phone chase.

The other half of this article is fairness. Holding money back for real open items is normal and expected. Holding the whole payment over a scuff is not, and it damages a relationship you may need for the warranty.

Before the walkthrough

Ask for the walkthrough when the contractor says the work is complete, at a time when there is good daylight and the person who ran the job can be there, not just a helper. Have these with you:

• The contract, the estimate and every signed change order. The walkthrough checks the work against what was agreed, not against what you imagined. See related: How to Read and Approve a Change Order.
• Your notes and photos from during the job, especially of anything that was going to be covered up.
• A pad or your phone for the list, and painter's tape to mark spots.

Plan on an hour for a room remodel and longer for a whole house.

Step 1: Walk the work together, in the order it was built

Start where the job started and move through it in the same order the contract lists the work. In a kitchen that might be demolition and patching, then plumbing and electrical, cabinets, counters, backsplash, appliances, paint and trim, cleanup. Following the contract's order means nothing gets skipped because you got distracted by the new counters.

Look closely, at eye level and with a flashlight raked across surfaces at a low angle, which shows paint misses and uneven grout that straight-on light hides. Open every door and drawer. Look under the sink and behind the toe kicks.

Why together: a contractor standing beside you can fix small things on the spot (a hinge, a loose handle), explain things that look wrong but are intended, and agree on what is genuinely open. A list you email afterward gets argued about item by item.

Step 2: Make a written punch list as you go

A punch list is the written list of remaining items, each with a description, a location and who fixes it. Write each item specifically: "Upper cabinet left of hood, door sits 1/8 in lower than its neighbor" can be checked; "cabinet doors" cannot. Put a piece of painter's tape on each spot.

Sort items as you write them:

• Fixed during the walk. Cross it off, but leave it on the list so it is recorded.
• Open, contractor's. Work that was in the contract and is not done or not right.
• Open, someone else's. Work by a subcontractor or a supplier, such as an electrician returning or a backordered part. Still the contractor's responsibility to coordinate if they hired them.
• Not in the contract. Things you now want that were never agreed. These are not punch items. They are a new change order or a new job.

Both of you sign or initial the list, or the contractor confirms it by email the same day.

Step 3: Test what was installed, inside what is safe for you to test

Run everything the way you will use it. Turn every faucet on hot and cold, and look underneath for drips after a minute. Flush toilets twice. Fill and drain a sink and a tub. Run the dishwasher's shortest cycle if you have time, or ask that it be run before the walk. Turn on every light and fan. Press the test button on any new GFCI receptacles, and press reset. Run the heat and the cooling from the thermostat. Open and close any new doors and windows, and lock them.

Do not open equipment, remove covers, light pilots, or test anything by tripping a breaker. If something does not work, it goes on the list; the contractor diagnoses it. If anything smells of gas, smells hot or is sparking, stop the test, step away, and have the contractor shut it off; for a gas odor, everyone leaves the house and calls the gas utility or 911 from outside. See related: When to Stop and Call a Licensed Pro Around the House.

Step 4: Confirm the final inspection passed

If the job had a permit, it is not done until the building department says so with a final inspection. Ask to see the result, or look it up yourself on the department's permit portal or by phone. Check every permit, since one job can carry separate building, electrical, plumbing and mechanical permits, each with its own final. See related: What a Permit Means for You as the Homeowner.

Why this comes before final payment: an open or failed permit is the contractor's to close, and a closed permit is something you need when you sell, insure or refinance. Many contracts tie final payment to final inspection approval in writing. If yours does not, it is still reasonable to ask.

Step 5: Collect the paperwork

Before the final payment, you should have:

• Manuals and installation instructions for everything installed.
• Warranty information, both the contractor's own warranty on the work, in writing, and the manufacturer warranties on equipment. Many manufacturers require product registration within a set window after installation, often a matter of weeks; the card or manual states it. Ask whether the contractor registers it or you do, and do it that week.
• Model and serial numbers of installed equipment, or photos of the labels.
• Lien waivers. A lien waiver is a signed statement that a contractor, subcontractor or supplier gives up its right to file a lien on your property for the amount paid. Ask for a final waiver from the contractor and from each major subcontractor and supplier. Waivers come in two kinds: conditional, which takes effect when the payment clears, and unconditional, which is effective immediately. Several states, including California and Texas, prescribe statutory waiver forms. The usual sequence is a conditional final waiver when you pay and unconditional waivers once the funds clear. See related: Deposits, Payment Schedules and Lien Waivers for Homeowners.

File all of it in your records file. See related: Your House Records File and What Goes In It.

Step 6: Agree on dates for every open item

Each open item gets a date and a name next to it. "Electrician returns Thursday for the under-cabinet light." "Toe kick arrives in about two weeks; installer returns the following Monday." Without dates, an open item has no end.

A worked example: a kitchen remodel with a final payment due

The contract's final payment, called F here, was due on completion and final inspection approval. The walkthrough took 70 minutes. The punch list read:

PUNCH LIST - kitchen remodel   walk 05/14
                           fixed? who
1 Upper cab L of hood,
  door 1/8 in low           yes    GC
2 Grout haze, backsplash
  behind range              no     GC
3 Toe kick missing under
  sink base (backordered)   no     GC
4 Under-cab light, right
  of sink, does not light   no     elec
5 Paint touch-up, 3 spots
  at window casing (taped)  no     GC
6 Dishwasher not clipped
  to counter, tips forward  yes    GC
7 Hood damper sticks open   no     GC

PERMITS (portal checked 05/14)
Building final ......... passed 05/09
Electrical final ....... scheduled 05/19

PAPERWORK
Manuals: all except hood. Warranty
letter: yes. Waivers: GC conditional
ready; electrician + cabinet supplier
requested.

What the walk found, and how it was weighed.

• Seven items, two fixed on the spot. Items 1 and 6 were fixed during the walk. Item 6 mattered beyond appearance: a dishwasher that is not secured can tip forward when its door is opened with a loaded rack. Both stay on the list, marked fixed.
• Five open items. Items 2, 3, 5 and 7 are the contractor's own work; item 4 is the electrician's.
• The electrical permit was not final. The building final had passed, but the electrical final was scheduled for May 19. That one line decided timing: under the contract, final payment was not yet due, so holding it was not a negotiating move but the contract's own terms. The homeowner said so plainly and in writing.

After the inspection. The electrical final passed on May 19, and the electrician fixed the light the same visit, so item 4 closed. Four items were left: 2, 3, 5 and 7. The contractor estimated about 6 labor hours to finish them plus the backordered toe kick, and at the contract's labor rate that came to about 8 percent of F. They agreed to hold back that amount. The homeowner paid 92 percent of F against the contractor's conditional waiver for that amount, with the electrician's and the supplier's waivers in hand.

Closing it out. The toe kick arrived 12 days later and the crew finished all four items on one return visit. The homeowner checked each against the list, paid the remaining 8 percent of F, and once it cleared got the contractor's unconditional final waiver.

What is fair to hold back, and what is not

Fair:

• An amount that covers the open items at roughly what they would cost to finish, as in the example, agreed with the contractor and written down.
• The whole final payment, when the contract makes it due only on something that has not happened yet, such as a final inspection.
• Payment until you have the lien waivers the contract or your state's process calls for.

Not fair:

• The whole final payment over minor cosmetic items. Holding far more than the open work is worth can put you in breach of your own contract.
• Money for things that were never in the contract. Those are a new agreement.
• Money as leverage for extra work or a discount you did not negotiate before.
• Money for a choice you changed your mind about after it was built as agreed.

If you and the contractor cannot agree on what is open or what it is worth, put both positions in writing and talk to your own attorney or your state's contractor board before withholding more. This is not legal advice; your contract and your state's law govern.

References

• See related: Deposits, Payment Schedules and Lien Waivers for Homeowners
• See related: What a Permit Means for You as the Homeowner
• See related: How to Read and Approve a Change Order
• See related: Your House Records File and What Goes In It
• See related: When to Stop and Call a Licensed Pro Around the House