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Close Out Agreement

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CLOSE OUT AGREEMENT

This Close Out Agreement (the Agreement) is made effective as of by and between:

Recitals (WHEREAS)

WHEREAS, Client engaged Contractor to perform certain services and deliver final work product as described in the underlying contract or statement of work (the Work); and

WHEREAS, Contractor represents that, as of the Effective Date, Contractor has performed the Work, delivered the Deliverables identified in Section "Deliverables", and submitted final invoices in accordance with the agreed payment schedule; and

WHEREAS, the parties desire to set forth the terms and conditions for final acceptance, payment, release of claims, and any outstanding obligations in order to close out the engagement.

Scope of Work

The Contractor's completed services, deliverables and tasks subject to this Close Out Agreement are described below. The description controls over any prior summary references.

Payment Terms

Final payment due to Contractor for the Work shall be: Total Amount: $ .

Final invoice submitted by Contractor shall be payable within days of receipt. Late payments shall accrue interest at the rate of % per month (or the maximum permitted by law), in addition to reasonable collection costs.

Term and Termination

This Agreement commences on Start Date: and remains in effect through End Date: unless earlier terminated as provided herein.

Either party may terminate this Agreement for material breach by the other party if the breaching party fails to cure a breach within days after written notice. Termination shall not relieve either party of obligations accrued prior to termination, including payment for performed Work.

Upon termination, Contractor shall deliver all completed and in-progress Deliverables and an itemized statement of amounts due. Client shall pay undisputed amounts within the time frame set in Payment Terms.

Acceptance, Release and Final Accounting

Acceptance of final Deliverables shall be evidenced by Client's written notice of acceptance or, absent objection in writing within days after delivery. Upon receipt of final payment, each party releases the other from all claims, demands, liabilities, and causes of action arising out of or in connection with the Work performed prior to the Effective Date, except for claims that are expressly reserved in writing in this Agreement.

Confidentiality

Each party shall maintain in confidence and shall not disclose to third parties any Confidential Information of the other party disclosed in connection with the Work. Confidential Information does not include information that (i) is or becomes generally available to the public through no wrongful act of the receiving party; (ii) is rightfully received by the receiving party from a third party without restriction; or (iii) is independently developed by the receiving party without use of the disclosing party's Confidential Information.

The obligations under this Confidentiality section survive termination or expiration of this Agreement for a period of three (3) years, except that trade secrets shall be protected for as long as they qualify as trade secrets under applicable law.

Representations; Indemnity

Each party represents and warrants that it has the full power and authority to enter into this Agreement. Contractor warrants that the Deliverables materially conform to the Scope of Work for a period of thirty (30) days following acceptance; Contractor's remedy shall be, at Contractor's option, to correct nonconforming Deliverables or refund the portion of the fee attributable to such nonconforming Deliverables.

Each party shall indemnify and hold harmless the other for third-party claims arising from the indemnifying party's breach of this Agreement or its negligent or willful acts or omissions in connection with the Work, subject to applicable limitations and defenses.

Governing Law; Venue

This Agreement shall be governed by and construed in accordance with the laws of the State of without regard to conflict of laws principles. The parties submit to the exclusive jurisdiction and venue of the state and federal courts located in that state for resolution of disputes arising under this Agreement.

Entire Agreement; Amendment

This Agreement (including any exhibits, SOWs, and attachments referenced herein) constitutes the entire agreement between the parties relating to the subject matter hereof and supersedes all prior and contemporaneous agreements, proposals, and communications, whether written or oral. Any amendment or modification must be in writing and signed by authorized representatives of both parties.

Notices

Notices required or permitted under this Agreement shall be in writing and delivered to the addresses listed above or to such other address as a party may designate by notice to the other. Notices are effective upon delivery if delivered in person, or three (3) business days after deposit with a nationally recognized overnight courier.

Survival

Provisions that by their nature are intended to survive termination or expiration, including Confidentiality, Indemnity, Governing Law, and Entire Agreement, shall survive any termination or expiration of this Agreement.

Execution

The parties acknowledge and agree that the execution of this Agreement constitutes a final settlement and close out of the Work described herein, subject to the express reserved claims, if any, set forth in writing and attached to this Agreement.

Client:

By:

Date:

Contractor:

By:

Date:

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What a Close Out Agreement Is and when it’s used

A Close Out Agreement is a legal document used to confirm that parties have satisfied contractual obligations at the end of a project, transaction, or engagement. It typically documents final payments, acceptance of deliverables, releases of claims, warranty periods, and any remaining obligations such as retainage or corrective work. The agreement creates a clear record that work is complete and that each party has either received final compensation or accepted the final deliverables, reducing the risk of future disputes. Close out agreements are common in construction, procurement, real estate, and professional services engagements.

Why a Clear Close Out Agreement Matters

A precise close out agreement reduces post‑project disputes, documents acceptance and final payment, and creates an auditable record for finance, compliance, and tax purposes. It clarifies risk allocation and preserves lien and warranty positions while simplifying final accounting and regulatory retention.

Why a Clear Close Out Agreement Matters

Who typically prepares and signs Close Out Agreements

Organizations and individuals across project-based industries prepare close out agreements to finalize work and payments.

  • General Contractors and Project Managers — Prepare agreements to confirm final deliverables, release lien claims, and approve final invoices within construction projects.
  • Owners and Developers — Use close out agreements to accept work, authorize final payments, and document retained warranty obligations.
  • Vendors and Subcontractors — Sign to acknowledge payment received, confirm completion, and record any agreed warranty or punchlist items.

Signatories vary by document and contract value; ensure authorized signers execute the agreement to make it enforceable.

Core sections to include in a professional Close Out Agreement

A complete agreement should cover the operative facts, financial settlement, releases, and post‑close obligations so that all parties understand rights, remedies, and retention responsibilities.

Parties

Identify each contracting entity with legal names, capacity (e.g., contractor, owner), and contact information to avoid ambiguity about who is bound by the release.

Effective Date

State the effective date clearly; this date often triggers warranty periods and determines retention and statutory deadlines for claims and tax reporting.

Final Payment

Specify the exact payment amount, payment method, any retainage release schedule, and whether payment constitutes full settlement of outstanding invoices.

Mutual Release

Include narrow, clearly worded release language describing which claims are waived and any carveouts (e.g., latent defects, fraud, environmental claims).

Acceptance Criteria

Document deliverables accepted, test/inspection results if applicable, and any remaining punchlist items with deadlines for completion.

Attachments

Attach exhibits such as final invoices, lien waivers, certificate of completion, warranties, and a final project schedule to make terms enforceable and auditable.

Required information and key fields to populate

Party Names: Full legal entity names
Effective Date: MM/DD/YYYY format
Payment Terms: Final amount and payment method
Release Language: Scope and carveouts
Deliverables: Accepted items listed
Signatures: Authorized signer name and date

Step-by-step: completing and executing a Close Out Agreement

Follow a clear sequence to prepare the agreement, obtain approvals, and capture binding signatures with an auditable record.

  • 01
    Draft: Prepare the agreement with attached exhibits and payment details.
  • 02
    Review: Legal and finance review for carveouts and tax consequences.
  • 03
    Sign: Collect authorized signatures and notarization if required.
  • 04
    Distribute: Send final executed copies to all parties and file centrally.

How to configure an online workflow for this agreement

Set up the document with the correct fields, signer order, and retention policy to streamline approvals and preserve an audit trail.

Field Configuration
Document Upload Use PDF/A or DOCX; include all exhibits as separate attachments
Signature Fields Add signature, printed name, title, and date fields for each signer
Authentication Choose email link, SMS code, or KBA depending on risk
Routing Order Set sequential routing for approvals, parallel for concurrent signers

Where to send or file the executed Close Out Agreement

Decide distribution and filing locations before execution so recipients and records teams know where to store the final document.

  • Project File: Store executed agreement in the central project folder or contract repository
  • Finance: Provide final copy to accounts payable for release of last payment
  • Legal: Send to legal for retention and audit tracking
  • External Parties: Distribute fully executed copies to all signatories and key stakeholders

How to share and submit the agreement securely

Use secure channels and methods that preserve integrity and create an audit trail when distributing executed agreements.

  • Signed PDF: Export signed PDF with embedded audit trail
  • Secure Link: Share encrypted link via cloud storage or secure portal
  • System Integration: Archive via CRM/ERP integrations for recordkeeping

How signNow compares to other eSignature vendors on common decision criteria

Compare starting price, trial availability, bulk send, audit trail, HIPAA support, and envelope limits across vendors; signNow is listed first per comparative format requirements.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies Varies Varies Varies
Bulk Send Yes (Business Premium) Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes (BAA required) Yes Yes No No
Envelope Cap No cap 100 envelopes/user/year Varies Varies Varies

Common timing considerations and deadlines for close out activities

Identify contractual deadlines and statutory notice periods early so final payments, lien waivers, and acceptance actions occur on time.

Final Payment Date:

Payor must release final funds by contract date to avoid interest or dispute

Retainage Release:

Schedule release per contract; often 30–90 days after acceptance

Lien Waiver Submission:

Subcontractors provide waivers upon payment to clear title claims

Defect Correction Window:

Set a definitive period for punchlist completion and verification

Tax Reporting:

Keep records for IRS retention timelines to support tax filings

Common mistakes to avoid when preparing close out agreements

  • Failing to attach the final invoice or lien waiver, which can nullify the intended release and delay payment.
  • Using vague release language that does not specify claim categories or carveouts, leading to later disputes.
  • Allowing an unauthorized or improperly titled signer to execute the agreement, which can void the signature.
  • Not confirming payment reconciliation and retainage amounts before signing, causing post‑close payment disputes.

Short summary of legal and financial risks from improper closeouts

Contract Disputes: Breach claims may continue
Lien Exposure: Unwaived claims can cloud title
Tax Risk: Insufficient records affect audits
Payment Delays: Missing documentation stalls funds
Regulatory Fines: Industry rules may impose penalties
Invalid Signature: Improper execution may be unenforceable

Practical tips to complete Close Out Agreements accurately and quickly

Adopt standardized templates, confirm signatory authority, and use electronic processes that preserve an audit trail to reduce friction and risk.

Standardize Templates
Maintain a library of approved close out templates with required exhibits and release wording to ensure consistent, defensible language across projects.
Verify Signers
Confirm signer authority with a corporate resolution or delegation of authority, and capture printed name and title in the signature block.
Attach Proofs
Include final invoices, lien waivers, inspection reports, and warranties as exhibits so the agreement relies on objective supporting documentation.
Use Audit Trails
Capture timestamp, IP, authentication method, and signed PDF export to preserve admissible evidence of execution.

Industry examples showing how close out agreements are used

Real‑world examples illustrate practical benefits and the kinds of language teams rely on during finalization.

Martin Properties

Tim Martin used online close out agreements to finalize a lease assignment quickly and maintain compliance

  • Quick execution reduced administrative follow‑ups by multiple days
  • The project team preserved final accounting and avoided a potential dispute by attaching invoices and waiver exhibits to the signed agreement.

BIS

Dan Rotelli streamlined final contractor payments with a standardized close out template executed electronically

  • Centralized signatures prevented lost documents
  • Legal and finance had a verified record for auditing and reduced post‑close reconciliation by hours per project.

Who has authority to sign and how authority is established

Project Manager

Typically authorized to sign for operational closeouts under delegated authority from the owner or contracting entity; verify limits in the delegation of authority or contract.

Chief Financial Officer

Signs to confirm final payment and release when corporate policy requires financial signoff for settlement or lien waiver acceptance.

Frequently asked questions about Close Out Agreements and electronic execution

Answers to common legal, procedural, and technical questions encountered when preparing and signing close out agreements.


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