Legal Question in Construction Law in California

Technically, you are only entitled to withhold 150% of the amount in dispute. So if the repairs caused by their negligence REASONABLY amount to $500, you could withhold $750.00 until the problem is resolved. Otherwise, if you wrongfully withhold any amount more than the 150% reasonably in dispute, you could be liable for a 2% per month penalty (plus court costs and attorneys' fees) on the improperly withheld balance. See, Civil Code section 3260.

My copy (2013) of the Civil Code doesn't show any section 3260.

I'd suggest getting a simple written agreement that if you pay the bill 100%, that they'll pay for the damages. The original contract isn't changed in any respect by the harm done to your property. Your claim for the damage done is independent of the contract.

Wow, not often I see two wrong answers from my colleagues. Mr. Campbell is not only wrong in his code citiation (the prompt payment statutes have been revised and moved to the sections in the 8800 series of the Civil Code), but also because they do not apply to floor refinishing, because it is not considered a work of improvement (no contractors license required). Mr. Whipple is wrong that you are not entitled to set off negligence damages against contract payments owed. You must, however, only withhold enough to pay for the damage if the company does not. If that is less than half the contract price you cannot withhold half the contract price. If it is more, then you can actually withhold more. Personally, I would not allow a floor refinisher to repair a hole in my wall. I would hire a licensed drywall, plaster and painting company to do the work right and deduct the cost from the contract payment to the flooring company.