Final Payment on a BC Renovation: Holdback, Deficiencies and What to Check Before You Pay
The final payment is the last bit of leverage a homeowner has on a renovation. Once it is gone, getting small things fixed gets a lot harder.
That does not mean holding money back to punish a contractor. A good contractor wants a clean finish as much as you do. It means knowing what “finished” actually looks like, what B.C. law says about holdback, and what paperwork you should have in hand before you write the last cheque.
Holdback in B.C.: The Basics
Under B.C.’s Builders Lien Act, an owner paying for an improvement must retain a holdback equal to 10% of the value of the work as it is provided. This applies to home renovations, not just big commercial projects, and it cannot be contracted out of.
A few key points from the Act:
- How much: 10% of each payment or of the value of the work done, whichever is greater.
- How long: the holdback period ends 55 days after the contract is completed, abandoned or terminated, or 55 days after a certificate of completion is issued, if one is.
- Why it matters to you: trades and suppliers who worked on your house generally have 45 days after completion to file a lien against the property. If you have properly kept the holdback, your exposure to those liens is generally limited to the holdback amount.
- Holdback account: a separate holdback trust account is not required where the contract value is under $100,000, but the holdback itself still is.
In practice, many residential contracts are silent on holdback, and many homeowners have never heard of it. If your contractor pushes back, a short, friendly conversation usually solves it: holdback protects both of you, and it is released once the period has passed with no liens filed.
Holdback Is Not the Same as a Deficiency Holdback
The 10% lien holdback is about protecting you from unpaid trades and suppliers. It is separate from money you hold back because work is unfinished. If there are open deficiencies at the end of the job, agree in writing on what is outstanding, what each item is worth, and when it will be done. Pay for completed work and hold a reasonable amount for the open items until they are fixed.
Before the Final Payment: What to Check
1. Walk the Job Properly
Book a final walkthrough with the person who can commit to fixes, in daylight, with power, water and heat on. Go room by room, top to bottom. Open and close every door, window, drawer and cabinet. Run every tap and flush every toilet. Look along walls and floors with a flashlight held flat against the surface; raking light shows what overhead lights hide.
2. Write a Deficiency List Together
Mark each issue with painter’s tape, photograph it and write it on one list with the location, the agreed fix and a date. Both of you sign it. A deficiency that is not on the list tends not to get fixed.
Keep deficiencies separate from changes of mind. A cracked tile is a deficiency. Deciding you would prefer a different grout colour is a change order.
3. Confirm Inspections and Permits Are Closed
If the work needed permits, make sure the final inspections have passed and the permits are closed. An open permit can surface years later when you sell or refinance.
4. Collect the Handover Documents
- The contractor’s warranty in writing: what it covers, for how long and how to make a claim.
- Manufacturer warranties registered for appliances, windows and fixtures.
- Manuals, and a list of products used: paint colours and sheen, tile, grout, flooring and fixtures.
- Photos of the walls and ceilings before they were closed in. They show where the pipes, wires and blocking are.
- Labelled spare materials.
5. Reconcile the Final Invoice
Check the final invoice against the original contract, every signed change order, and any allowance differences. Make sure every payment you have made is credited, the holdback is shown, and there are no extras you never approved. This is where verbal “we’ll sort it out at the end” conversations come back to the surface, so have your paperwork ready.
6. Ask Whether Trades and Suppliers Have Been Paid
It is fair to ask the contractor to confirm in writing that subtrades and suppliers have been paid for work on your house. If anyone has told you they have not been paid, get advice before you release money.
What Is Normal After a Renovation
Some things are expected in the first year and are not signs of bad work: hairline cracks at drywall corners as new framing dries through the first heating season, a few nail pops, small seasonal gaps in wood flooring, and caulking at tubs and showers that needs a touch-up. A good contractor will usually come back once near the end of the first year to deal with these.
If Things Go Sideways
Keep it in writing, stay specific and keep it calm. List what is outstanding, what you are holding and why, and what will release it. If a lien is filed or the dispute is heading for court, talk to a lawyer, because the deadlines in the Builders Lien Act are strict.
Tools and a Second Opinion
I made a Renovation Handover Kit with the walkthrough, deficiency list, handover document checklist and final payment release in one printable, fillable PDF.
If you want a builder with more than 30 years of experience to look at your final invoice, change orders or contract, I offer a 30-minute video consultation, or a written review if you would rather have it on paper.
Book a 30-Minute Homeowner Construction Consultation, CA$75
This article is general information, not legal advice. Builders lien rules are technical and fact-specific; for a dispute or a lien, get advice from a B.C. lawyer.
