contractor demanding payment when not done yet.

Hi everyone! I need your help. My contractor is demanding that I give him the final payment now when he's not completed with the job yet.
He claims that the laws in Arizona say that the contractors get paid for the work completed or they will challenge our Certificate of Operations.
I told him until we pass all the health codes and the fire department codes, he is not going to get the final payment. I don't trust him.
I've heard of too many horror stories of consumers getting ripped off by contractors, so I don't want to pay him until we pass the codes.
My question is can he challenge our certificate of operations? We can't pass the health dept. if we don't have that!

We can't open our business without the certificate of operation. The fire department issues this and they inspect this to make sure our unit is safe.
I am not misunderstanding my contractor. We had our final inspection last week and we failed because of my contractors' incompitence.
(No hot water in bathroom, no fire monitor, no faucet in the kitchen, etc. ) We failed our inspection because none of those were done!

I know what this guy is up to! If I pay him now, he is going to take off if we don't pass the code!

Is there really a law in arizona that I have to pay him now even though I haven't received my certificate of occupancy?

Having dealt with contractors in AZ I have several comments about your post but need the answer to one question first.

astroguyaz:

No hot water in bathroom, no fire monitor, no faucet in the kitchen, etc. We failed our inspection because none of those were done!

Were those items specified in your contract?

And before you reply, please take out your contract and READ IT.

Then tell me if the installations of those items were specified in the contract.

What does your contract say?

Most reputable contractors specify 1/3 on signing of the contract, 1/3 when work is halfway complete, and 1/3 when the job is complete. 

If he did not complete the job according to code, (assuming he is a state licensed contractor) then you need him to return to correct to code.

This site should be helpful.  Workmanship standards in AZ:

http://www.azroc.gov/A...

Here is how to file a complaint in AZ:

http://www.azroc.gov/A...