Contracts: Punch Lists for Erected Buildings

Disclaimer – this and subsequent articles on this subject are not intended to be legal advice, merely an example for discussions between you and your legal advisor.

‘Punch lists’ give new building owners an opportunity to inspect their completed building and builders/erectors to be able to remedy non-conforming work, without it becoming an ongoing challenge. 

CORRECTION OF WORK: Purchaser must inspect the completed building, at Purchaser’s sole expense, and notify Seller by Certified Mail, Return Receipt Requested within five (5) days of completion of any claimed non conformity, defects, or difference between the goods and materials described on the face hereof or an approved Change Order, and as received by Purchaser, Purchaser’s written notification must be only one (1) “punch list” identifying specifically work to be completed or corrected and must be signed by Purchaser. 

Purchaser’s failure to make said written claim constitutes a waiver by Purchaser of said non-conformity, defect or difference by failure to so promptly. A claim that goods are non-conforming shall not permit Purchaser to deduct any sum from any payment due unless such claim has been allowed in writing by Seller. 

Payments shall be paid in full in agreement with Terms of Sale and in the event of later allowance for any claim, Seller shall promptly make payment to Purchaser for the amount so allowed.  

Seller shall expeditiously complete all work stated on the punch list for which Seller is responsible under the terms of this agreement only. Purchaser cannot contract with any alternative contractor for the performance or completion of any work, nor claim a credit or back charge for the cost of completing any item stated on the written punch list, nor occupy or use Seller’s work until and unless Seller shall have first been given reasonable notice and opportunity to correct the work stated on the Punch list. 

If Purchaser contracts with an alternate contractor to perform any pick up work or otherwise complete the project without first affording the opportunity to Seller to do so, or if Purchaser commences to use or occupy the space in which Seller performed work, Purchaser agrees to accept all work “as is” and thereby waives any claim against Seller. 

Any repairs or corrections made by Purchaser must have prior written authorization by Seller, to receive reimbursement. Upon Seller’s completion or correction of the work identified on the single written punch list, any retainage or amount withheld from any payment(s) shall be paid immediately to Seller. All further work shall be performed as warranty work.

HOLDBACK: Purchaser may withhold a sum of money equal to Purchaser’s estimated cost of completing or correcting the work stated on the punch list. If holdback option is selected by Purchaser, this condition shall serve as Seller’s written demand to Purchaser that Purchaser shall deposit a dollar amount equal to the withholding in a joint interest bearing account (with all accrued interest on dispersed money stated on the punch list). These are the exclusive remedies of the Purchaser.

UTILIZATION: Prior to complete payment of the balance owed on this Agreement, including any and all retainage and holdback, Purchaser shall refrain from utilizing the premises upon which Seller has performed work, unless mutually agreed upon in writing between Seller and Purchaser. If Purchaser uses or occupies any of the work performed by Seller prior to making full payment to Seller, Purchaser agrees to thereby unequivocally accept all of Seller’s work as is, without recourse.

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