Release and final payment clause: what it means, a typical example, and what to ask for
A release clause makes you give up claims against the builder, usually in exchange for final payment or a final progress payment. Some go further and treat your claims as released automatically if you don't raise them by a date. Signed without a carve-out, a release can wipe out claims you already notified.
A typical builder version
As a condition of final payment the Subcontractor must execute a deed of release in the form required by the Contractor. Any claim not included in the Subcontractor's final payment claim is deemed to be released and is barred.
Illustrative wording of the kind found in builder-authored subcontracts, not taken from any one contract.
What it means for you
To get your last payment you must sign away every claim, known or unknown, and anything you forgot to include in your final claim is lost even if you never sign anything.
- Final payment conditional on a release in a form you haven't seen.
- A deemed release: claims lost by a date passing, without a signature.
- No carve-out for claims already notified in writing or for defects you're liable for anyway.
What market looks like
No release as a condition of payment of amounts you're owed; if there is a release, it excludes claims already notified in writing and claims listed in a schedule, and there is no deemed release.
What to ask for
"Any release given by the Subcontractor does not release claims notified in writing before the date of the release or listed in the schedule to the release."
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Common questions
Do I have to sign a deed of release to get final payment?
Only if the subcontract makes it a condition. If it does, list your open claims in writing and carve them out of the release before you sign.
What is a deemed release?
A clause that treats your claims as released when a date passes or a step is missed, without you signing anything. It is one of the clauses most worth removing.
One clause rarely tells the whole story
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General information, not legal advice. Example wording is illustrative. Check any clause you rely on against your full contract and your state's Security of Payment Act. Written by Mat Kennedy, The Construction Contracts Co.