What to Do When a Contractor Demands Final Payment Before Fixes
The contractor is standing in your hallway. The work is ninety-five per cent done, and the last five per cent is the part you look at every single day. He wants the final payment now, and the tone has shifted quietly from friendly to firm.
Somewhere at the back of your mind is a thought you feel slightly guilty about. If I pay him today, will I ever see him again?
You are right to think it. That is not paranoia. It is experience, and it is usually correct.
These are some of the most last-minute inspections we get booked for, and the call almost always sounds the same. The contractor wants paying tomorrow. The owner is not sure the work is actually finished. Nobody in the room can settle that question with any authority.
That is the real problem. Not the money. The uncertainty.
There is a proper, standard, entirely respectable way to handle this, and it does not require an argument in your own home.
Can You Withhold Final Payment From a Contractor in Dubai?
Yes, in principle. UAE law allows a party to a two sided contract to hold back its own performance when the other side has not performed theirs. If the work is not complete, the payment for completion is not yet due. But the professional way to do this is not to refuse payment. It is to hold retention.
The principle sits in the Civil Code. Under the 1985 Civil Code (Federal Law No. 5 of 1985), Article 247 provides that in bilateral contracts, where the reciprocal obligations are due, either party may abstain from performing its obligation if the other party does not honour his.
On 1 June 2026 the new Civil Transactions Law (Federal Decree-Law No. 25 of 2025) replaced the 1985 code. It preserves the same principle and states it more plainly.
Which code governs your job depends on when the contract was signed. Agreements concluded before 1 June 2026 generally remain under the old law, so most renovations running today still sit there.
Construction work has its own chapter either way. It is a muqawala, a works contract: Articles 872 to 896 in the old code, Articles 812 to 839 in the new one.
Two cautions now, and they matter more than the headline.
First, this is not a licence to stop paying whatever you like. The Civil Code also requires contracts to be performed in good faith. Holding a large balance over a paint touch up is not a defence, it is a self inflicted wound.
Second, never hold money silently. A payment held quietly is a dispute. A payment held in writing, against a dated defect list, is a position. Write to him first, set out what is outstanding, and give a deadline.
And be fair, because the law is: the same code obliges an owner to take delivery of work the contractor has genuinely completed and placed at his disposal. Fairness is not weakness here. It is what makes the firm part stick.
The Distinction That Ends the Argument: Practical Completion vs Final Completion
Almost every payment standoff we walk into is the same argument, and both sides are half right. The reason nobody can win it is that they are using one word, finished, for two completely different things.
What practical completion means
The work is substantially done and the space is usable. The kitchen works. The bathroom drains. The lights come on.
There is a defect list, but nothing on it stops you living there. This is the point at which the contractor has earned the bulk of his money, and he is entitled to it.
What final completion means
Final completion is when the defects are closed and someone has verified they are closed. Not when they are reported closed. When they are checked.
That is a different date, and it is usually weeks or months later.
Why the contractor is paid at the first and the retention at the second
Refusing the whole balance because a wardrobe door is misaligned is unfair, and no court is going to be impressed by it. He reached practical completion. Pay for practical completion.
What he has not earned yet is the last slice. That slice has a name, and the construction industry invented it for exactly this problem.
How to say this without a confrontation
The line that does the work
“I am not withholding payment. I am releasing the payment due at practical completion, and holding the retention, which is standard.”
Say it calmly. Say it once. Do not apologise for it, and do not explain it three times.
Every contractor has heard the word retention their entire working life. You are not insulting him. You are speaking his own industry’s language back to him, and that is precisely why it lands.
Retention: The Tool Every Homeowner in Dubai Should Know About and Almost None Do
What retention is, and why the industry invented it
Retention is a percentage of the contract value that the owner holds back after the work is done, and releases only once the defects are closed.
Commercial construction has used it for generations, for one reason. Everyone in the industry knows that the day the final payment clears, the incentive to come back evaporates.
Retention is not distrust. It is the mechanism that removes the need for trust.
How much
Five to ten per cent of the contract value is the range commonly used in construction practice. Agree it in writing at the start, in the contract, not in the hallway at the end.
When it is released
After the defects liability period, once every defect on the list has been verified closed. Twelve months from completion is the most common period in UAE construction practice, but it is contractual. If it is not written down, you do not have one.
If you did not agree retention in your contract
We will be honest with you, because the internet usually is not. This is much harder, and you cannot invent a retention clause after the fact.
What you can still do is negotiate. Offer a staged release against a named, dated defect list: a payment now, the balance on verified rectification, with dates on both.
Most contractors take it. Most contractors would rather be paid in two weeks than sue you for three months.
| Payment stage | What it is for | When it should be released | What must exist first |
| Deposit or mobilisation | To start the job | On signing | A written scope and specification |
| Interim payments | Progress | Against verified milestones | Evidence the milestone is complete |
| Practical completion payment | The work is substantially done and usable | At practical completion | A defect list, agreed and documented |
| Retention, five to ten per cent | Your only leverage after the job is finished | After the defects liability period, once every defect is verified closed | A verification report, not a claim |
What to Do Before You Release Anything
- Do not pay under pressure in the hallway. Nothing has to be decided today, and any contractor who insists otherwise is telling you something.
- Produce a written defect list, with photographs, dated.
- Get an independent inspection. This is the step that turns an argument into a finding.
- Release the practical completion payment if the work is substantially complete. Be fair. Fairness is leverage.
- Hold the retention in writing, against that named and dated list.
- Agree a rectification schedule, with dates on it.
- Verify before you release the retention. Not when he says it is done. When someone independent says it is done.
- Keep every payment and every message in writing. Voice notes and doorstep promises are not evidence.
What If the Contractor Refuses, Threatens, or Walks Off?
This is the section you actually came for, so we will not soften it.
He threatens to stop work
Some will. That is a real risk and we are not going to pretend otherwise.
But think about what has actually happened. A contractor who walks off rather than accept a documented defect list and a standard retention was going to disappear after payment anyway.
You have simply found that out sooner, and far more cheaply.
He threatens legal action
He can bring a claim. So can you. Claims are decided on evidence, not on volume.
The party with a dated defect list, photographs, written messages and an independent report is the party with the evidence. The party with a raised voice and a WhatsApp thread of promises is not.
In our experience, the threat is a great deal more common than the claim.
He has your keys or your access card
Ask for them back in writing at practical completion. If they do not come back, change the lock or deactivate the card.
This is normal practice at the end of any job, not an accusation. A contractor who treats a key handover as a bargaining chip has told you exactly who he is.
He promises to come back and fix it after payment
Some contractors do. Many do not. That is the honest verdict, and every homeowner in Dubai already suspects it.
Here is the reframe that matters: you are not being asked to distrust him. You are being asked to remove the need for trust from the transaction altogether.
That is all a retention clause has ever been.
Where to escalate a contractor dispute in Dubai
There are two separate roads here, and people lose weeks on the wrong one.
The money is a civil matter. A payment dispute is settled between the parties or in the Dubai Courts. Dubai’s consumer complaint service at the Department of Economy and Tourism publishes eligibility rules that exclude sectors such as construction and real estate, so it is usually not the route for a contractor dispute. Confirm the current position on the official portal before you spend a fortnight waiting on it.
The contractor’s licence is a regulatory matter, and this part has changed. Since 8 January 2026, Dubai Law No. 7 of 2025 has brought contracting activity under a single framework run by Dubai Municipality, with a unified contractor register, mandatory classification, a binding code of conduct, and penalties that run from fines to classification downgrades to removal from the register.
Two things follow from that. Check that your contractor is registered and classified for the scope of work you handed him. And understand that a registered contractor now has more to lose from a documented dispute than he did two years ago.
Why an Independent Inspection Is In the Contractor’s Interest Too
The whole standoff exists because of one unanswered question. Is the work actually finished?
Both sides are arguing about a fact that neither of them has established. An inspection converts that argument into a finding, and a finding is something both parties can act on.
A good contractor wants that. It defines the finish line, it ends the debate, and it gets him paid faster than a two month standoff ever will.
A contractor who welcomes an independent inspection is usually a contractor with nothing to hide, and in our experience they get paid sooner. A contractor who resists one is telling you something. Let that land quietly, and draw your own conclusion.
What We See on Contractor Work Inspections
The version of this call we see most often is a villa or apartment fit out that looks finished. New kitchen, two bathrooms redone, fresh tiling, everything gleaming.
The owner’s list has a chipped worktop edge, a door that catches, grout lines that wander. All of it visible. All of it fixable in a morning.
Then our inspector opens up the wet areas. The waterproofing membrane was never flood tested, so nobody knows whether it holds. Tiles have gone down over a screed that was not given time to cure. The electrical work looks perfect at the faceplate, which tells you nothing at all about what happens behind it.
Moisture meters, thermal imaging and a proper flood test answer in a morning what the eye cannot answer at all. Our water leakage inspection exists because these failures hide so well.
Here is the lesson, and it is the whole reason this page exists.
The defects you can see are the ones a contractor will happily fix. The ones that matter are the ones you will find in eighteen months, when his number no longer connects.
Frequently Asked Questions
Can I withhold final payment from a contractor in Dubai?
In principle yes. UAE contract law lets a party abstain from performing where the other side has not performed. But withhold in writing, be proportionate, and pay what is genuinely due. Hold the retention, not the whole balance.
How much retention should I hold back from a contractor?
Five to ten per cent of the contract value is the range commonly used in construction practice. It has to be agreed in writing in the contract at the start. You cannot bolt it on at the end.
What is a contractor’s defects liability period?
The window after completion in which the contractor must return and fix defects at his own cost. Twelve months is the most common in UAE practice, but it is contractual, not automatic. If your contract is silent, you do not have one.
What if the contractor refuses to fix defects after being paid?
Your leverage is largely gone, which is the entire argument for retention. You are left with a claim, and a claim needs evidence: a dated defect list, photographs, written exchanges, and an independent report.
Can a contractor take legal action if I do not pay the final instalment?
Yes, and so can you. That is why the documented, reasonable, partially paid position is so much stronger than a flat refusal. Be the party with the paperwork.
Should I get an inspection on a renovation or fit-out?
If the balance you are about to release is meaningful, yes. A contractor work inspection is the only way to know whether the work is finished before the money moves.
What is the difference between practical completion and final completion?
Practical completion means the work is usable and substantially done. Final completion means the defects are closed and verified. The contractor is paid at the first. The retention is released at the second.
What if I did not agree retention in my contract?
You cannot create it retrospectively. Negotiate a staged release instead: part now, the balance on verified rectification, with dates in writing. Most contractors accept it, because they want to be paid quickly.
Verify Before You Release the Money
You are minutes from a decision that becomes irreversible the moment the transfer clears. The question is not whether your contractor is a good man. It is whether the work is finished.
Our contractor work inspection answers exactly that. RERA certified, DED registered, InterNACHI certified inspectors, engineer led, with thermal imaging, moisture detection and pressure testing where the job calls for it, and a detailed report with annotated photographs in your hands within twenty four hours.
Book it before you pay, not after. Afterwards, it is just a record of what went wrong.
We also re-inspect once the rectification is done. That is what turns “he says it is fixed” into a verified closure, and lets you release the retention with confidence.
Prime Inspections & Snagging The Binary by Omniyat, 1914-203, Dubai, United Arab Emirates Phone: +971 50 602 1830 Email: connect@primeinspections.ae Book a Contractor Work Inspection
Disclaimer
This article is general information about UAE contract principles and current Dubai regulation. It is not legal advice, and we are inspectors, not lawyers.
Contractor disputes turn heavily on the wording of your own contract, and article numbering changed when the new Civil Transactions Law came into force on 1 June 2026. Regulatory channels change too.
Before you withhold a material sum, take advice from a UAE qualified lawyer and confirm the current position with the relevant authority.
