Contractor Deposit-Too early?
I am on the verge of signing a contract for a basic basement renovation, nothing custom, just walls, floor, ceilings, pipes, electrical. It will be $55,000. The GC has asked for 10,000 on contract signing, even though he may not get started till December. He claims he needs deposits for the electrician and plumber. He…
I am on the verge of signing a contract for a basic basement renovation, nothing custom, just walls, floor, ceilings, pipes, electrical. It will be $55,000. The GC has asked for 10,000 on contract signing, even though he may not get started till December. He claims he needs deposits for the electrician and plumber. He has since lowered it to 8,000. I think it’s waaaaaayyyy to early to give any kind of substantial deposit now, and still think the the size of the reduced deposit is still too much(15%). Remember, there is no custom work being done that requires a materials deposit. What’s reasonable that I should counteroffer and the maximum I should agree to?
Thanks.
In my opinion, and as a contractor, it is too early to ask for 15%. A good reputable contractor should have enough money to float the beginning of a project, or at least wait until the actual start date. It sounds like he really just wants to make sure you arent going to back out, and if you give him 15%, then you certainly wont. Tough call, go with your gut. On a separate note, I’m not one to steal work from other contractors, but I bet I could do your renovation for less than he’s charging you ! If you havent fully committed, contact me if you’d like: smdconstruction@gmail.com
Hello my name is Dan and I am a licensed contractor if you want give me a call and let me see the job and I will work with you and I know for sure that I would not ask that much for a down payment at contract signing I can be reached at 718 919-7794 or 718 902-9213 and 646 726-0475 I only hope you did not put your john hancock on anything yet.
Thank You,
Dan
i assume that you have an architect on the job, to make sure that benchmarks for further payment requests are met..did you use the standard aia contract which lays out all of the conditions to be met?..are the contractors recommendations good?.. if you are doing the renovation unfiled with the dob, cancel the job ..you are setting yourself up for nothing but headaches.. do it when you can afford a real job.. it seems that you have trust issues before the job has started, and i , as a contractor, would turn down the job
What jcarch said.
Does the auto shop that does a $2k repair on your car ask for a 1/3rd of the cost up-front? In any area of the construction industry other than home improvements jcarch’s description is the norm. Damned if I understand why it’s not for home renovations. After all, some of the larger contractors that do them are working under the “norm” on jobs of equivalent value for commercial clients.
I wouldn’t sign a construction contract without my lawyer’s OK, but others will have a different view. If you have a lawyer, what does s/he say? The contract normally provides details on the payment schedule.
This whole setup sounds like a red flag to me. What Jim Hill said.
The Neighborhood Housing Service of East Flatbush says give them 10 percent or $1,000 to start, whichever is LESS. Does that sound extreme?
I have paid 1/3 upon signing of contract, 1/3 at midpoint of project, and balance following satisfactory completion. But that’s with detailed contracts and using contractors with sterling references (licensed, insured, naming us additionally insured, etc.). I never have and never would hire a contractor who wouldn’t specify a timeframe in writing, including timeframe for substantial completion, or who claimed they needed an advance for their subs.
I would not allow a client to pay until a couple of weeks before work was to start (a specific date, not “around the holidays).
bmfesq…w/ your 3×1/3 payment schedule, at 2 points, the owner’s very exposed financially if the contractor disappears… and at the end the contractor is exposed if the owner decided not to pay.
It’s a small job, but have the initial payment credited against the first invoice from the contractor, and pay only for what’s done/on site after that. For a job this size, this may mean paying once a week so that the contractor’s not too exposed, but that’s fine. Withold 10% for the end, when absolutely everything’s been done.
This is all very standard. If your contractor balks, its a red flag.
Why should he reserve his time for you without a good-faith deposit? If the guy does not come recommended and you don’t trust him, why are you using him?