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I have a question for all of you guys that do remodel work as a part of your normal operations. My neighbor is adding a few rooms to his house to prepare for the arrival of an adopted child in a few months. He asked me to look over the contract. The payment schedule for the remodel goes like this:
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%25 down
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%17 after week 1
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%17 after week 2
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%17 after week 3
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%17 after week 4
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remainder upon substantial completion
This struck me as off, I recomended a milestone payment schedule. Am I missing something or is this the norm. Thanks
Chris
Yeah, been a few years since I have been the trade, but without some completion standards, that is pretty scary for the homeowner. I’d tie it to foundation, framing inspection, painting, then punch list and finially completion.
17% after week 1? What if only 6% is done?
93% paid after 4 weeks? what if 25% of the job is the only thing done? The guys left to pay 7% upon completion of an unfinished job?
Look, I’m not a contractor, but…I added a 1000 sq ft to my house last year. We did it on a cost + basis. We paid for the contractors man hours + materials as the job progressed. We had a choice to choose our own subs along the way. In other words, HIS electrician submitted a bid, we had a right to get a price from OUR electrician and so on. We ended up holding the balance till we were damn well satisfied that everything we had in writing was fulfilled. And, it was a hell of a lot more than 7% of the balance.
Chris, have him take the contract to an attorney. Don’t know what the job is bid out at but for a couple hundred bucks, a good lawyer will pick apart and revise that contract to make sure your friend is not getting hosed.
In other words, cover thy backside.
I like what Al said about paying based on completed items. Hold at least 10% until punch list is done and a Lien Release has been signed and returned to the homeowner from every single contractor that stepped foot on the job. That way the homeowner won’t fear a lien in case the General “forgets” to pay the subs.
I agree with everyone else, the draws have to be tied to percentage of completion with a 10% retainage for punch out.
All:
As usual, I disagree with everyone.
Your contract should read “Before drywall begins, so and such a payment will be due…..”
What if some aspect of the job is unable to be completed due to no fault of yours? Why should that hold up your money?
When they know the rock isn’t going up until you get a check, things will proceed smoothly.
Joe
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