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Old 03-23-2009, 10:53 AM
 
547 posts, read 1,096,954 times
Reputation: 534

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I am sub-contracting work out for my 2nd floor finish of bonus room and closet (350 square feet).

I THINK I have hired a guy (licensed and insured GC) who will be doing the framing and the finish work himself (no subcontractors working for/with him). I received his contract last night that requires me to pay him $1,900 down now and then the rest at two more installments during the building phase. The total cost I will be paying him for his part of the contract (framing and finishing work) is about $5,400.

Is this normal in the "building world" to ask for the deposit in that amount for a job around 5k? I have checked out this guy's references and they were all good. I am just nervous about sending him $1,900, signing his contract, while waiting for him to begin my job. Is it normal to have start dates also written into contracts to protect the homeowner? His contract is obviously written to protect him.

My gut feeling tells me this doesn't seem right. Is this something I should be paying attention to?

I've pulled the permits and am acting as my own GC --- I just don't want to make my first mistake before one board is nailed on the project. This has been a frustrating go in that I have weeding through so many bad contractors and subcontractors and now when I think I have found THE ONE THAT IS THE BEST I am getting cold feet.
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Old 03-23-2009, 11:08 AM
 
Location: Marion, IN
8,192 posts, read 19,659,932 times
Reputation: 6641
I have worked for several contractors over the years. It has been standard to require a deposit of up to 50% of the estimate prior to commencement. The smaller the contractor the higher the deposit. The 50% generally will cover the cost of materials so that if you back out the contractor is not left paying for material that he does not need.

It has also been standard for the contractor to file a lien at commencement. As you make your progress payments be sure to get a Release of Lien for each payment, and a Final release of Lien when you make your final payment.
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Old 03-23-2009, 11:25 AM
 
Location: sowf jawja
1,917 posts, read 5,193,695 times
Reputation: 924
If your guy is licensed and insured, why isn't he pulling the permits?

Most state laws require the contractor to pull the permit anyhow. If at all possible, I'd have everything transferred into your general contractor's name. This is for your protection.
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Old 03-23-2009, 11:39 AM
 
547 posts, read 1,096,954 times
Reputation: 534
Quote:
Originally Posted by southgeorgia View Post
If your guy is licensed and insured, why isn't he pulling the permits?

Most state laws require the contractor to pull the permit anyhow. If at all possible, I'd have everything transferred into your general contractor's name. This is for your protection.

I'm in NC and any homeowner can pull permits. I pulled them 3 months ago. He is not working/acting or being paid to be the GC --- I am essentially hiring him to do the framing and finish. He will be here when the job begins, then come back when we are near the finish part. I have a drywall guy, electrician, HVAC licensed guy that I have hired directly to do the work - no one else asked for money up front but expect to be paid in full upon successful county inspection approval. I understand my pulling the permits puts me in direct line of responsibility BUT the GC's in this area to managing this project for me were charging way too much to manage it. I feel comfortable managing it --- I was just questioning the lack of start date in the contract and the $1900 up front before I even knew when he would be beginning.

Last edited by kwalk65; 03-23-2009 at 11:40 AM.. Reason: spelling
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Old 03-23-2009, 12:01 PM
 
Location: Apple Valley Calif
7,392 posts, read 11,853,615 times
Reputation: 5063
In California, it is illegal for a contractor to accept more than 10% down payment for construction work. As the job progresses, the contractor may collect several payments of 10% until the job is 50% complete, and then no more until the job is completed.
The law is to protect the homeowner from being ripped off by crooked contractors, of which there are many..
If the contractor hasn't got enough cash flow to operate in this manner, they shouldn't be in business.
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Old 03-23-2009, 12:02 PM
 
Location: California
2,059 posts, read 5,681,686 times
Reputation: 2836
Contact your contractor state license board for information. They can probably answer your questions and you can check his license, etc.

http://www.nclbgc.net/index.html

It is my understanding that contractors can ask for 10% up front or a specific amount up to ?. This is something the contractor board in your state can answer. But $1,900 seems awfully high to me.

You also pay as you go. If half the job is done, half the payment is paid. I believe you withhold about 10% at the end until you are satisfied the job has been finalized correctly.

Again, talk to the contractor board and they can tell you what you should require and how to handle payment. Laws are different in each state.
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Old 03-23-2009, 12:20 PM
 
Location: Houston, Texas
10,427 posts, read 29,739,460 times
Reputation: 9642
Quote:
Originally Posted by Donn2390 View Post
In California, it is illegal for a contractor to accept more than 10% down payment for construction work. As the job progresses, the contractor may collect several payments of 10% until the job is 50% complete, and then no more until the job is completed.
The law is to protect the homeowner from being ripped off by crooked contractors, of which there are many..
If the contractor hasn't got enough cash flow to operate in this manner, they shouldn't be in business.
No wonder everyone is leaving California. In all it's useless efforts by communist California to protect homeowners they have effectivly dismantled every small business person. I guess that's why so many of them escaped Cali and moved to Nevada.

So Cali expects contractors to lay out all that money up front?

No wonder why Cali can't even pay it's own bills. Yet it it tells others how to run theirs. Sounds scary close to how the Feds run their business too.
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Old 03-23-2009, 12:31 PM
 
Location: Houston, Texas
10,427 posts, read 29,739,460 times
Reputation: 9642
Quote:
Originally Posted by kwalk65 View Post
I am sub-contracting work out for my 2nd floor finish of bonus room and closet (350 square feet).

I THINK I have hired a guy (licensed and insured GC) who will be doing the framing and the finish work himself (no subcontractors working for/with him). I received his contract last night that requires me to pay him $1,900 down now and then the rest at two more installments during the building phase. The total cost I will be paying him for his part of the contract (framing and finishing work) is about $5,400.

Is this normal in the "building world" to ask for the deposit in that amount for a job around 5k? I have checked out this guy's references and they were all good. I am just nervous about sending him $1,900, signing his contract, while waiting for him to begin my job. Is it normal to have start dates also written into contracts to protect the homeowner? His contract is obviously written to protect him.

My gut feeling tells me this doesn't seem right. Is this something I should be paying attention to?

I've pulled the permits and am acting as my own GC --- I just don't want to make my first mistake before one board is nailed on the project. This has been a frustrating go in that I have weeding through so many bad contractors and subcontractors and now when I think I have found THE ONE THAT IS THE BEST I am getting cold feet.
I been in the construction business for 3 decades and can say the total price as well as the money draws are pretty damn fair. I do like to see approx. start and approx. completion dates so you are right there.

You are right, by you taking out the permits you just transfered all risk to yourself. The framer could do a lousy job but still build within code. What more could it have cost you to let him take the permits? But that is all done now.

If you like the guy, I trust you screened him because you sound comfortable with him, then have him revise the contract to include start and finish dates. Keep in mind these will be approx dates. If laying out the $1900 up front is so scary to you then offer to buy the materials and deduct it from his price. You could have done a cost-plus contract with him and you buy all materials. I personally do not like this because customers will know what Im making and as a rule consumers do not like others to make money. Those who say they understand people have to make money only feel this way if they are paying you $6.55/hr.

But your talking small dollars here. Generally a framing package on a new home is 10% of the total price of the home. Remodeling should be close. So you purchase the $500 to $1000 in materials and deduct it from the $5000 job price. That might make you feel better?????? Maybe him too?????
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Old 03-23-2009, 12:43 PM
 
Location: Apple Valley Calif
7,392 posts, read 11,853,615 times
Reputation: 5063
Quote:
Originally Posted by desertsun41 View Post
No wonder everyone is leaving California. In all it's useless efforts by communist California to protect homeowners they have effectivly dismantled every small business person. I guess that's why so many of them escaped Cali and moved to Nevada.

So Cali expects contractors to lay out all that money up front?

No wonder why Cali can't even pay it's own bills. Yet it it tells others how to run theirs. Sounds scary close to how the Feds run their business too.
Yes, because California does what is necessary to protect the citizens, it must surely be a communist organization.
The only possible hope this state has for survival would be for DS41 to move here and take over the government, and run it properly. But then Washington, and the whole country would lose out on the benefit of your brilliance.
The honest contractors in California have no problem playing by the rules and making a good living. The crooks don't care so much for the laws..
Fortunately, there has never been a shady contractor in any other state of the union, and especially not in Texas... You are a very lucky man..... albeit a man who sees communists under every rock.....
Like everything else, California leads, the nation follows, so prepare yourself for the 10% law to arrive on your shores soon.... It will weed out some of your shady competition....
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Old 03-23-2009, 01:05 PM
 
Location: California
2,059 posts, read 5,681,686 times
Reputation: 2836
Seems to me that if a contractor can't start a job with 10% down and future payments, he isn't doing very well with his business.

My husband is a retired general contractor and 10% down was never a problem.
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