We had a clause in our contract to withhold 10%. Paid out 90 days after we moved in once house was fully completed and no more bills coming in. Paid out only nice we all agreed via a joint bank account that required all our signatures

What does your contract state?

A construction contract should include a schedule of payments to be made by the owner or owner's lender based on the builder/remodeler achieving defined construction milestones. For a custom home, there might be two dozen individual line items in a construction draw schedule (x% at completion of foundation, y% at completion of framing, z% due at completion of rough-in plumbing, etc.) For a remodel, it might be just a couple. Check with the specific requirements outlined in your contract.

In our area, most lenders want the final payment to be no less than 5% of the contract price for a home. I don't know what percentage they would want for final payment for a remodel, but anything between 5% and 10% would be reasonable to me.

@WestCoast Hopeful @PPF. @Charles Ross Homes thank you all for your input. He didn't specify anything in the contract aside from the initial payment. The project has been a disaster and it's taken more than twice as long as it was expected to and we are at the point where if they left now we would have partial floors installed, electrical wired but not hooked up, doors not yet installed, plaster and painting to still be completed, shingles to be put on and painted, closets to still be completed and a kitchen to still be installed.

We have paid 59% of the project at this point and he's requesting another payment to bring us to 84%. Based on his 'actual' spending so far he's used 77% of the budget and he expects to be right around budget (or so he said although I'm sure that'll change). I don't mind paying him but it seems odd to pay him 84% of the budget when I feel like with all those pieces not yet completed we aren't close to being at 84% completion.

You should never get ahead of the work with payments. Ideally the contract has a schedule of values that says "the $50,000 project is broken down as follows:

$4,000 painting

$22,000 new flooring

$12,000 electrical work

$8,000 plumbing

$4,000 door replacement"

or whatever.

You pay $4000 when the painting is complete, not $2000 when it looks about half done. That's a recipe for disaster, because who knows what percentage is complete. And you want the contractor motivated to complete the work.

You could break some of those categories up, like:

Flooring:

Living Room $5000

Dining Room $3000

Kitchen $6000

Hall $2000

Bedroom #1 $3000

Bedroom #2 $3000

If you don't have a SOV in your contract, then sit down with him now and make one. Allocate your total contract cost among the various portions, then make future payments only in accordance with that schedule.

No more money.

You should pay for the documented work that is completed. A competent, established contractor does not need to get a payment for work that isn't yet done.

Many a contractor will just 'write off' a punch list if it isn't a good size amount.