Practical completion is one of the most consequential moments in any building contract. It's the point at which the contractor's main obligations are considered discharged, the risk for the building passes to you as the client, the defects liability period begins, and typically the bulk of any remaining balance becomes due. Getting this right matters considerably.
Many homeowners treat practical completion as a formality: "when the work is done, we pay up." That's not what it is. It's a specific contractual event with precise legal consequences, and understanding it protects you from both paying too early and from being left with an outstanding dispute that becomes much harder to resolve once the money has changed hands.
What Practical Completion Actually Means
Practical completion is the point at which the works are complete for all practical purposes, meaning the building can be occupied and used for its intended purpose even if minor items remain. It is not the same as complete completion (when literally everything is finished to perfection).
The courts have established that practical completion can be certified even if minor snagging items remain, provided those items don't prevent occupation and use. What it cannot be if there are known latent defects (serious defects that will require significant remediation), incomplete structural elements, missing building control certification, or significant amounts of outstanding work.
Under most standard contracts (JCT Minor Works, JCT Homeowner Contract), practical completion is certified by the contract administrator (an architect or surveyor acting independently). If you don't have a contract administrator, practical completion is typically agreed in writing between you and the contractor. The key word is "agreed": you don't have to accept a contractor's declaration that they're practically complete if you don't agree that the work meets that standard.
What Changes at Practical Completion
Several important things happen on the date of practical completion:
Risk transfers to you. Before practical completion, if the building burns down or is damaged by flood, the contractor (under most standard contracts) bears the risk and must reinstate. After practical completion, the risk is yours. This is why it's essential that you notify your insurer before practical completion and ensure your home insurance covers the completed extension or building from that date.
The defects liability period starts. This is the period (typically 6 to 12 months under most residential contracts) during which the contractor is obliged to return and remedy any defects that appear. Defects that arise in this period from workmanship or materials failures are the contractor's cost to fix. Defects that arise from your use or from events outside the contractor's control are not.
Liquidated damages stop running. If your contract has a liquidated damages clause (a specified weekly sum that the contractor pays for overrunning the completion date), that sum stops accruing from the date of practical completion.
Half the retention is released. If your contract provides for a retention (a percentage, typically 3-5%, withheld from stage payments), half of that retention is typically released at practical completion. The other half is released at the end of the defects liability period.
Practical completion certificate issued. If you have a contract administrator, they issue a formal Practical Completion Certificate. Keep this document: it establishes the date that starts the defects liability period and the limitation period (the time within which you can bring legal action for defects, typically six years for a simple contract and twelve years for a deed).
What to Do Before Certifying Practical Completion
Before you agree to or certify practical completion:
Complete your snagging inspection. Walk the whole project and note everything that isn't finished or isn't satisfactory. This is the last moment at which you have full leverage over the contractor. Agree which items are true snags (defects or incomplete work) and which are post-completion items that you've agreed to accept as outstanding. Get the snag list agreed in writing.
Obtain all required certificates. Before practical completion, the contractor should hand over the Building Regulations Completion Certificate, all Electrical Installation Certificates (EICs), Gas Safe certificate for any new gas work, FENSA or CERTASS certificates for new windows if applicable, and any other certification relevant to the work. If these documents are not available, the work is not complete.
Confirm building control sign-off. Building control should have done their final inspection and confirmed that the works comply with building regulations. If the final inspection hasn't happened, chase it. You shouldn't certify practical completion without the building regulations side also being resolved.
Check all services are operational. Heating, hot water, electrical, drainage: all should be working. Commission the heating if it's a new system. Confirm MVHR or ventilation systems are set up and running.
Get a handover pack from the contractor. This should include all operating manuals for installed equipment (boiler, ventilation system, electric gates, etc.), copies of all warranties and guarantees (for materials, waterproofing if applicable, any specialist treatments), maintenance instructions, and copies of the certification listed above. File this carefully: it's the documentation you'll need when something needs servicing or when you sell the property.
The Defects Liability Period
The defects liability period typically runs for 6 to 12 months from practical completion. During this period, if defects appear in the contractor's work (cracks in plastering, door that stops closing, leak from a window, underfloor heating zone that stops working), you notify the contractor in writing and they are obliged to come back and remedy the defect at their cost.
The practical reality is that contractors are more responsive to defect calls during this period than after, because the final retention payment is still being withheld. This is why retentions exist: they maintain a financial incentive for the contractor to engage with post-completion issues.
Keep a log of defects as they arise. Notify in writing (email is fine) with a description and photographs. Agree a timescale for rectification. This documentation is important if any defect becomes disputed: was it notified in time? Was it a defect in the work, or normal settlement/wear? The written record establishes the timeline clearly.
At the end of the defects liability period, do a final inspection. If all notified defects have been remedied satisfactorily, the remaining retention is released and the contract obligations are complete. If defects remain outstanding, the retention should be withheld until they're resolved.
The Final Account
The final account is the reconciliation of the original contract sum against variations (additional items instructed during the build) and any deductions (liquidated damages, cost of contractor-caused damage that you had to remedy yourself). The contractor presents a final account claim; you review it against your variation log and agree or dispute each item.
A well-run project has a variation log maintained throughout: every variation is instructed in writing with an agreed price before it's carried out. The final account reconciliation is then relatively straightforward. A poorly managed project, where variations were instructed verbally and prices were never agreed, produces a final account dispute that's both expensive and unpleasant to resolve.