Changing contractors mid inspection

[Jennifer Duke]

General contractor (contractor #1) called for inspection but has not returned in over a week to make corrections. He is also 6 weeks over his projected finish date. He left a cap off the new tankless heater, causing a need for an emergency gas company fix it on a Sunday morning after I noticed a strong smell of gas outside. There have been issues, delays, unreliable statements and an overall unpleasant experience. 

Good general contractor (contractor #2) was working on some outside construction got curious and noticed some electrical compromises in the attic. 

I clearly need to change contractors mid-inspection phase. I'm almost done. 

If the work was completed satisfactorily, I would pay the contractor #1 $9000 for final payment on a project that cost $130K so far. 

How to best make this transition to a new contractor? 

[Emilio Ramirez]

Does your contract with Contractor #1 address termination? 

If it doesn't, that is something you should have in there for future projects.