# Owner withholding payment



## rshackleford (Jul 2, 2007)

I am working on a project with state and federal funding for a municipality. a town resident has claimed our company caused structural damage to his home for an amount of $3800. i just received a letter from the city that they will be holding that amount out of our final payment. 

is this correct? can they do this?


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## 480sparky (Feb 1, 2009)

Sounds like you need to call your lawyer instead of posting on the internet.


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## Darwin (Apr 7, 2009)

rshackleford said:


> I am working on a project with state and federal funding for a municipality. a town resident has claimed our company caused structural damage to his home for an amount of $3800. i just received a letter from the city that they will be holding that amount out of our final payment.
> 
> is this correct? can they do this?


Review your contract. I would start there. Good luck.


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## rshackleford (Jul 2, 2007)

it is a standard EJCDC contract.


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## BMAN (Aug 21, 2006)

So what happened to his property?


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## 480sparky (Feb 1, 2009)

BMAN said:


> So what happened to his property?


What is he *alledging* happened to the property?


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## rshackleford (Jul 2, 2007)

since make the original post i have contact my insurance agent he has asked me to create a claim for the damage. i have don so.

the homeowner is alleging that our volvo ec 330 caused cracks in his drywall.


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## 480sparky (Feb 1, 2009)

rshackleford said:


> since make the original post i have contact my insurance agent he has asked me to create a claim for the damage. i have don so.
> 
> the homeowner is alleging that our volvo ec 330 caused cracks in his drywall.


So................ you're just going to pay up?


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## rshackleford (Jul 2, 2007)

i am going to let the insurance company determine if the money is due. that's why we pay them the big bucks i guess.

but the real question is if the owner can withhold that payment.


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## Framer53 (Feb 23, 2008)

What does the contract say?


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## rshackleford (Jul 2, 2007)

it is a standard EJCDC contract.


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## naptown CR (Feb 20, 2009)

This may sound like it's coming from Forest Gump But please elucidate on the ejcdc part of the equation.


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## rshackleford (Jul 2, 2007)

it is a set of documents accompanying every state and federally funded project i have ever worked on it. it is called the "standard general conditions of the construction contract: funding agency edition." it prepared by "Engineers Joint Contract Documents Committee" and published by American council of engineering companies, national society of professional engineers, and American society of civil engineers. it is specifically the EJCDC C-710 document set.


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## rshackleford (Jul 2, 2007)

Oh, and it has been endorsed and approved by the AGC.


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## GregS (Oct 1, 2006)

rshackleford said:


> the homeowner is alleging that our volvo ec 330 caused cracks in his drywall.


How? Did you drive over it?


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## Leo G (May 12, 2005)

If you driving on his property caused his drywall to crack he has a lot more issues than the drywall. Weak foundation, unstable framing to name a few.


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## rshackleford (Jul 2, 2007)

the operator was breaking through six inches of frost and shook the whole block.

what and how it happened is not the issue. the question is if the owner can withhold payment for this?


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## naptown CR (Feb 20, 2009)

Who were you working for the town or the owner?


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## rshackleford (Jul 2, 2007)

i have a contact with the town and am working for them.


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## naptown CR (Feb 20, 2009)

That makes it a bit stickier. Did you have to post a bond for this type of damage? I think you are on the right track with contacting your Insurance company. They will provide a lawyer to you at no cost to review everything. They will also ferret out wether the HO is trying to pull a scam. Was only one home damaged? Or only one home you had to get close enoough to. then there might be issues with their structure if say you are digging between two houses and only one was damaged.


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## rshackleford (Jul 2, 2007)

pcplumber said:


> Most likely, your insurance company is not going to pay a lawyer $3500+ to decide whether or not you are liable. They are going to pay the homeowner $3800. They call it a nuisance payment. This is just my guess and has been one of many past experiences. The amount of $3800 sounds high for cracked drywall. I could see $15,000 to $250,000 if you cracked the foundation.
> 
> Speak with the homeowner. Act like you are concerned. Bring in some experts and build your case. Get evidence and opnions in writing, or bring in your own contractor and make the repairs. I would not bother my insurance company for a small claim like this one.


my guess is you are correct. i am sure we have a deductible of $2500, so the insurance guys won't b out much. the HO got so upset with me because i was going to have one of our trusted contractors do the work instead of his guy. the total damage was 125' of cracks. the HO called me on my cellular phone and he was so belligerent and nasty that i actually started recording the calls. it was bad.


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## rshackleford (Jul 2, 2007)

BeefJerky said:


> God help you when Line 6 paragraph A subsection 2 of your "muinicipal" contract states that your going to take it up the keyster every Monday at 3PM.


when biding i don't read EJCDC C-710 because it is always the same. if what you are suggesting is entered into the contract it would be setup as a modification to EJCDC C-710 and would be in its own section following directly after the actual document. some funding agencies must have their say and will add a lot of additions or subtractions to the EJCDC C-710, but i have never seen one involving keisters.


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## Winchester (Jun 29, 2008)

Guys, when you tender bids on jobs like this it is usually big money jobs and very competitive.

You have a timeframe and large documents that you fill out to the customer's specs. The contracts are basically standard documents that people who do these kinds of jobs should be familiar with.

_They_ provide the contract and scope of work. If you change the contract they look at the next bid, that's it, game over. *There is no revising.* If you don't like the terms you don't bid on the job. Most of these jobs have at least one meeting where they go over the project and you can also ask questions.

If they choose your bid, and you back out, they call the bid bond. You've already signed something committing to the bid when you submitted it.

You don't dictate anything except how much you are willing to do the job for.

I'm interested in considering jobs like this in the future, but in most cases you need a large staff and large crews and deep pockets. You screw one up and have the bid bond or performance bond called you've pretty much screwed your business, never able to get one again.

I can't really offer any advice, but it sounds like you're doing the right thing with the insurance co.
As far as the owner with-holding pay You need to go through the contract and docs with a lawyer and I'm sure he could tell you the answer to that.


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## rshackleford (Jul 2, 2007)

Thank you Winchester. you don't have to have to be that big to get on these projects. the first thing is to get involved in smaller projects and find an insurance company that will bond you. i recommend EMC insurance. however, as the bid prices get higher you definitely need to show ability and FINANCIALs for the bond companies to be willing to back you. when you get really BIG forget the bond companies then you post a cashiers check in the amount required.

again thank you Winchester.


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## OGStilts (Aug 30, 2007)

Yes...Winchester I think I have been trying to express this but not quite so eloquently. Nicely done. 

Bottom line is that anytime you are dealing with a contract you have the right to word it the way you see fit, accept or not accept it as written, but the other party may not want to accept it as well. This goes from buying a car to building a national monument. It doesn't matter. It's contracts 101. He's getting too wrapped up in the fact that he is working with an engineer and the fact it's government work. The rules don't change, they are just more rigorously followed to a standard set of bidding documents. 

Shackle, I currently don't deal in this kind of work but I have worked with plenty of AIA documents over the years to know what I'm talking about here. Unfortunately for you, I don't feel the need to justify myself to you with my credentials.

I still think the most important thing is for him to share how he carefully excavated over 300 feet away and still caused 125' of drywall cracks. It's no wonder this guy doesn't trust you in his house to fix them. I don't blame him.


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## rshackleford (Jul 2, 2007)

OGStilts said:


> Yes...Winchester I think I have been trying to express this but not quite so eloquently. Nicely done.
> 
> Bottom line is that anytime you are dealing with a contract you have the right to word it the way you see fit, accept or not accept it as written, but the other party may not want to accept it as well. This goes from buying a car to building a national monument. It doesn't matter. It's contracts 101. He's getting too wrapped up in the fact that he is working with an engineer and the fact it's government work. The rules don't change, they are just more rigorously followed to a standard set of bidding documents.
> 
> ...


you obviously don't have experience in this work. you just said you agree with Winchester's statements and then contradict yourself immediately by saying these contracts are negotiable, which Winchester clearly stated they are not.

the home with cracked was was a 100' away. the 300' away home did not experience any damage but did have a nick knack knocked off a table and broke.

additionally by stating you have done AIA work shows your inexperience as it is quite clear that working for an Engineering firm and an Architect are extremely different and if you had ever done work with an Engineering firm you would know this.


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## OGStilts (Aug 30, 2007)

OK I can't believe I'm going to reply yet again to you but I hate when people get on here and ask stupid questions and then when they get answers they don't want to hear they tell everyone responding to them that they don't know what they are talking about. 

You are a DITCH DIGGER. Nothing wrong with that. The world needs ditch diggers. But stop making this out to be rocket science. My reference to AIA documents refers to the similarities that have with EJCDC C-710 in the fact that they are a standard bid form that you fill in the blanks. I don't work with EJCDC forms because I don't dig ditches nor do I do government work nor would I want to. That doesn't mean I'm not familiar with government agencies or working with engineers. Have you ever done any bluff restoration work or working with the flood plains? There's a little bit of government and government engineers involved with this type of work in the form of FEMA. Yes lots of fun and lots of paper shuffling. I've got one project right now going on two years of working with FEMA. Lots of different civil and soil engineers to keep happy in these situations. I would venture to say a few more than digging a ditch. So get off your high horse with all this freaking engineer BS and I work for the government statements. I don't think anyone here is impressed.

I have had two points since the beginning and I still stand by both of them:

1) ALL CONTRACTS ARE NEGOTIABLE - My god, I don't understand how you still disagree with me on this. Last I checked this is still America. You are free to negotiate any work terms you want or you can walk away. Period! I know Obama is doing his best to make contracts irrelevant but as far as I know that hasn't happened yet. 

2) YOU DAMAGED SOMEONE ELSE'S PROPERTY AND YOU SHOULD PAY TO FIX IT. - Learn your lesson and don't repeat your mistakes. It's only $3,800. Be thankful it wasn't more serious.

I'm done with this thread at this point. If I want to keep having a conversation with someone who just doesn't get it there are plenty of newbies around here asking how much stuff costs that are way more fun than this. 

Here's to hoping Shackle doesn't seriously injure or kill someone on his next ditch digging job. Cheers.


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## rshackleford (Jul 2, 2007)

> 1) ALL CONTRACTS ARE NEGOTIABLE - My god, I don't understand how you still disagree with me on this. Last I checked this is still America. You are free to negotiate any work terms you want or you can walk away. Period! I know Obama is doing his best to make contracts irrelevant but as far as I know that hasn't happened yet.


ok, i will conceed that this contract is negotiable in the sense that if i don't like the terms i should not submit a bid. however, once i have signed the bid documents there is no negotiation. i am signing those docs saying that i accept the terms, that is it! the only way to negotiate these terms is to walk away and not bid. if any of the contract terms are chagned the funding agencies will simply tell me to get lost and turn over my bond or accept the terms. that is how these work, period. so yes you are correct they are negotiable.

it is still quite obvious that you lack experience in this kind of work as i lack experience working for architects. you are very defensive which is your defense mechanism for your lack of knowldege and experience in this matter.



> 2) YOU ARE AN IDIOT WHO DAMAGED SOMEONE ELSE'S PROPERTY AND YOU SHOULD PAY TO FIX IT. - Learn your lesson and don't repeat your mistakes. It's only $3,800. Be thankful it wasn't more serious.


i don't agree with the idiot part, but i agree that my crews have damaged property and i intend to fix it. i would like to restate my orginal question which is also the title to this thread:

can the owner withhold payment for $3800 of claimed damages and transfer this money to the HO claiming damages?

that is the question, not all this other BS that has arisen from this thread.


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## greg24k (May 19, 2007)

Since nobody knows what they talking about, and it seems you know everything... *Why are you still here yapping about the same issue? * 

If you want to know if he can hold your money... call your Lawyer and ask him. I am sure he already spoke to his Lawyer and his Lawyer said that he can...:whistling




rshackleford said:


> it is still quite obvious that you lack experience in this kind of work as i lack experience working for architects. you are very defensive which is your defense mechanism for your lack of knowldege and experience in this matter.
> 
> 
> 
> ...


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## Astrix (Feb 23, 2009)

I reviewed the EJCDC contract document that you posted (it is very similar to our Canadian equivalent, the CCDC contract, and I think the answer to your question is here (on page 50):



> Article 14 - PAYMENTS TO CONTRACTOR AND COMPLETION
> Section 14.02 - D - _Reduction in Payment_
> 
> 1. Owner may refuse to make payment of the full amount recommended by Engineer because:
> ...


In all likelihood, the homeowner claiming the drywall damage has also made a claim with the City, and that is why the City now wants to withhold payment from you until this is all settled.

If you read a bit further, the last sentence of Paragraph 2 of the same section:



> 2. ..... Owner shall promptly pay Contractor the amount so withheld, or any adjustment thereto agreed to by Owner and Contractor, when Contractor corrects to Owner's satisfaction the reasons for such action.


If you can show to the City that your insurance company is handling the claim (and in all likelihood also defending the City -- you probably had to give a Certificate naming the City as Additional Insured, correct? -- then the City will probably release the hold-back to you.


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## naptown CR (Feb 20, 2009)

Is this over now?


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## rshackleford (Jul 2, 2007)

finally some constructive conversation. Thanks Astrix.

what about this statement though?



> ARTICLE 12 – CHANGE OF CONTRACT PRICE; CHANGE OF CONTRACT TIMES
> 12.01 Change of Contract Price
> A. The Contract Price may only be changed by a Change Order. Any Claim for an adjustment in the Contract Price
> shall be based on written notice submitted by the party making the Claim to the Engineer and the other party to
> the Contract in accordance with the provisions of Paragraph 10.05.


these two article seem to contradict.


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## Astrix (Feb 23, 2009)

The Contract Price hasn't changed; you are still entitled to the full Contract Price if the reason for the Reduction in Payment is satisfactorily addressed.

Ironically, since the Reduction in Payment clause is already part of the contract, a change order is not required to invoke it; it already exists in the current contract.


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## rshackleford (Jul 2, 2007)

point well taken. thanks. i think you are correct Astrix.

Now it is over!


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## 480sparky (Feb 1, 2009)

rshackleford said:


> I am working on a project with state and federal funding for a *municipality*. a *town resident* has claimed our company caused structural damage to his home for an amount of $3800. i just received a letter from the city that they will be holding that amount out of our final payment.
> 
> is this correct? can they do this?


 
OK, let me get this straight...... Your contract is with a city (meaning: public entity). And someone's PERSONAL PROPERTY was damaged? What does that have to do with your contract? Your deal is with the *city*, not *Joe Sixpack*. _If Joe says his house was damaged, then he should contact a lawyer, not the city_. *The city has NOTHING TO DO WITH THE DAMAGE CLAIM.*


So to answer your question: *NO, they cannot do that.*​ 



Is that simple enough, or do we need to strech this thread out to 1000 posts?


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## rshackleford (Jul 2, 2007)

sparky, read article 14, it says if there are any claims against me regarding the project then the city can do withhold payment. astrix did a nice job of spelling it all out. for the city to withhold, Joe Sixpack has to make a claim against the city. joe six pack has a right to claim against the city sa their contractor did the damage.

btw, i had a call from the mayor today telling me he sent the letter just to get my dander up and get me to make some action. the reality is he will not withhold payment if the HO and i settle which with my insurance company we will settle. oh, and the HO hasn't filed a claim with the city, he has just bitched a lot.


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