Payment to home improvement contractors

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Topic: Payment to home improvement contractors

General Contractors June 15, 2011 at 6:03 pm

Payment to home improvement contractors

I recently had a bathroom renovation done and felt uncomfortable with the payment schedule as I had originally assumed that what my contractor was asking for was typical. It is water under the bridge now but I am looking ahead and thinking of renovating my second bathroom in the not too distant future and want to be a bit more knowledgeable as this was my first renovation and I think I was a bit naive.  I know that different folks agree to different terms but for a small powder room renovation of under $5,000,what would be typical in the way of payment?  How much up front, as the work progresses, etc. The entire renovation would only take 5-7 working days.  What percentage should be held until the job is completed to my satisfaction, etc?  P.S.  This is a wonderful forum! So glad I found it!

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I’ve never seen a contract that allowed final payment “upon satisfaction.”  I utilize the American Institute of Architects standard contract language, which typically calls for final payment upon “substantial completion.”Contracts are a two-way street, and both parties must behave fairly.As far as the actual contract goes, you might want to check in with your attorney.  I think the rule of thumb is, don’t hire anyone you don’t feel comfortable with.  All of my clients at some point or another use the phrase “due diligence” to describe their contractor seeking process.  Asking a question here is just one step.  Get multiple bids and references.Good luck!

Thank you for your response.  I just wanted to know what is typical in this sort of situation as I do want to be fair not only to myself but the contractor as well. 

A common payment schedule is broken into thirds, here is an example for a bathroom1/3 upon agreement1/3 upon completion of plumbing rough-in and walls closed1/3 upon completionI

You should have whatever you feel comfortable with written into the contract.  It’s a negotiation, but the contractor is not necessarily wrong in only wanting to hold 10% for punch list/post substantial completion – this what the AIA outlines, however, i feel this is generally based on larger jobs with a longer payment schedule and is not right for every situation – i just had a client on a very small job similar to this come to an agreement with the GC on 50% up front, 40% at substantial completion, and the remaining 10% upon completion of punch list (which i’m taking to mean “upon satisfaction” in this case although as the above poster mentioned, these are not words used in construction-related contracts typically).  

Our company usually follows the 1/3, 1/3 and 1/3 payment schedule, especially when doing kitchen and bathroom renovations, but every situation is different.  There are times when client’s prefer to give 1/2 upfront, but it really depends on the terms of the contract, i.e. who is responsible for purchasing the materials, how long a project may take, etc. It is always best to shop around, and to be certain that you enter into a contract with a contractor that is licensed and insured.

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