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Put Penalties for late completion in the Agreement

penalties Put Penalties for late completion in the AgreementThe contract should stipulate the penalties that will be assessed against the contractor if the work is completed after the agreed-upon deadline. You may have chosen this contractor based on the earlier completion, even though the price was a little higher than the other contractors.

If the job is unjustifiably delayed by the contractor, you should not be penalized by having to pay the premium price this contractor charged you, when you no longer have the benefit of the earlier completion date.

If the contractor knows in advance that there will be stiff penalties assessed every day the job is delayed past the agreed deadline, that contractor will be more motivated to finish your job on time. If you are an investor, you can base the penalty amount on the rental income you are losing because your tenant was unable to move in until the repairs were completed.

For example, if your property has an expected monthly rental income of $900, you would set the penalty amount at $30 per day for each day past the agreed-upon deadline. On the other hand, if you live in the house (or will be living in the house after the repairs are complete) you can base the penalty on your mortgage payment, which is due to your lender every month whether you are living in the house or not. Accordingly, your daily penalty amount can be set at one-thirtieth of your monthly mortgage costs for every day the job is delayed past the agreed-upon deadline.

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