A recent decision of the Arizona Supreme Court ruled that a general contractor was not entitled to final payment because the architect had not issued a final Certificate for Payment as required under the terms of the construction contract.
Architects's Certificate Essential For Payment
From the reported decision it appears that the owner-contractor agreement incorporated the American Institute of Architects General Conditions, paragraph 9.7.2, which requires the issuance of the architect's final Certificate for Payment before final payment becomes due to the general contractor.
That decision appears harsh in view of the fact that the trial jury had determined that the general contractor was entitled to payment of $130,000.00.
Arizona Case Not Majority View
Realizing that the architect is the owner's representative, the contractor involved with a difficult owner might expect problems in obtaining the architect's certificate. He is not, however, without remedy. The Arizona case does not necessarily represent the rule in other states. In fact, one of the Arizona Supreme Court Justices involved dissented in the case, characterizing the majority opinion as a "gross miscarriage of justice."
A contractor faced with an unwarranted refusal of the architect to issue a final Certificate for Payment should be able to recover nevertheless. If the AIA general conditions apply, he should first accomplish all requirements necessary to justify issuance of the architect's Certificate. The required steps generally include such items as obtaining lien waivers, necessary occupancy permits, architect's acknowledgments that all punchlist work has been completed (preferably in writing), all required guarantees, warranties, instruction manuals, as-built drawings and other items specifically required by the contract documents.
This documentation should be submitted to the architect with a written request that he either issue a final certificate for Payment or state any reason for his refusal in writing.
The Architect Is Important To The Payment Process In Most Contracts
If the architect states reasons for his refusal, those reasons should be analyzed. If valid, corrections should be made. If valid or if the architect does not give or have valid reasons for refusing the Certificate, it is doubtful that any reasonable court or arbitration panel presented with such evidence would deny relief.
The moral of the Arizona case discussed is that contractors should thoroughly familiarize themselves with the provisions of their contracts. With that knowledge they should then satisfy every contract requirement. If the owner or his architect then fails to perform their obligations, the contractor should be successful in legal proceedings.