Substantial completion is great news for subcontractors, too! It means final payment is right around the corner and retainage should be released sooner than later. If the contractor fails to reach this point in their performance, they will likely be barred from attempts to obtain the full contract price. Non-payment could even be considered a material breach of contract by the owner. If a contractor is faced with non-payment after reaching substantial completion, the contractor can choose to cease work. Substantial completion means it’s almost time to get paid! Reaching substantial completion entitles contractors to the remaining balance of the contract price, minus any retainage withheld. Once the project reaches substantial completion, it will trigger some crucial timelines.

The expiration date for liability & warranties.

A contractor’s deadline to file a mechanics lien or bond claim.

The deadline for payments to the GC and subcontractors (final payment and retainage).

Why substantial completion mattersĬontractors and suppliers need to know the date of substantial completion in order to calculate future deadlines. Letting a deadline pass could mean losing out on your right to secure payment for your work.Īsk questions and get answers about substantial completion from lawyers and payment experts from across the US. Ultimately, when there’s confusion or dispute about the date of substantial completion, it’s a good idea to play it safe and use the earliest of the events that occurred. It’s important for contractors and suppliers to understand how substantial completion is determined on their project, so they can take action if they don’t get paid for their work. In others, it may be up to the courts to decide. In some cases, it’s spelled out in the construction contract. However, it can be frustratingly difficult to pin down. The American Institute of Architects (AIA) defines substantial completion as “the stage in the progress of the work when the work or designated portion is sufficiently complete in accordance with the contract documents so that the owner can occupy or use the work for its intended purpose.”

In many cases, it’s used to calculate the deadlines for final payment, mechanics lien claims, and other rights and responsibilities for those who worked on the job. Substantial completion marks the moment in a construction project when the owner can occupy or use the property, but some punch list items remain to be completed.

S stop before completion