Contractor payment schedule advise

[Kendall69]

Your first call should be to a real estate attorney, not here. I don't mean to be sarcastic, but any advice you get here is useless.
Have an attorney THAT IS EXPERIENCED in new construction.
I won't pay for a dinner check unless my attorney looks at it. People are afraid of attorneys, but they have saved me thousands, and only cost hundreds.

Another great thing when you are dealing with contractors is that you can always say "my attorney said blah, blah, blah" - it takes the onus off of you.

Even I won't give you any more advice that that, even though I have built many buildings and developed quite a few things.

 

[SnowRidge]

Your first call should be to a real estate attorney, not here. I don't mean to be sarcastic, but any advice you get here is useless.

Ummm, wow. Who knew? A million posts, tons of advice, all useless. Muhammad, shut down your servers.

 

[EddieWalker]

I disagree with Kendall and getting an attorney involved. All that will do is cost you more money up front, and probably lose you a contractor. I don't have anything against working on a contract, but the second you modify that contract without your attorney, the entire thing is junk. If you think you can build a house, barn or even a shed without any modifications from the original plan, then you're not living in reality. Simple to complicted things come up as the building progresses. This is usually where the budget goes out the window. A flat ceiling can get turned into a trey ceiling real easy. The last house that I built had three totally different changes to the pantry alone!!! Each was fine, but not exactly what the homeowner (wife) wanted. One style of door or window might look fine in the store, or in another house, but when it comes time to put it in, things look different when it's your own home. Outlet locations, lighting, switches and spickets have a real common habbit of getting changed multiple times on a job. The list goes on and on. It's not that anybody is wrong, it's just that until you've built a dozen homes or so, you just don't know what it will look like from the drawings, especially when it's your own.

If and when you make a change to the plan, ask your contractor how much first. Some changes are so simple and easy, it doesn't matter. Others might take a few days and more material. Cost can really varry on these things. As long as you both agree to them, put it in writing, then it's not an issue when the budget changes.

The same goes with materials. I give a price on a job with a certain allowance for materials. Lets say it's flooring and I said $1,000 for a certain room. Before we start the job, they agreed to this price, but after it's started and we get read to buy that flooring, they decide they want something different. If it's the same product, like tile, then my labor is the same. If they change from something like carpet to tile, then labor goes up as does material. This is another common budget buster.

If you had to deal with a lawyer over all these changes, you'd never get anything done waiting on the lawyer, not to mention what the lawyer would charge you. And then what will you do if there is a problem? Hire the lawyer some more to take the contractor to court? Most likely, he'll just quite and walk away from the job before losing money on it. So now you win the case because the contractor didn't even show up. What do you do now? House is still sitting there.

Eddie

 

[IllMarty1]

Stumpfield,

Well I am somewhere between Eddie and Kendal on the lawyer thing. I did hire a local attorney to help draw up the contract, which was what the builder and I agreed to verbally. Money well spent I think.

In that contract, you need to have a way of reimbursement for changes i.e. cost plus x%. No need to get the lawyers involved for that stuff. We had some changes and add ons. He gave me fair pricing which included 15 % profit, and did nice job.

Start with a solid contract that protects your interest. That is why the lawyer is needed BEFORE, so you don't need one after.



Normally LD starts at the end of the total contract completion date.

"Do I need a clause if he takes the 10% and never comeback to work or drag his feet, I can terminate the contract, hire someone else and sue him for liquidated damage....."

You could do it that way in a properly written contract. In my line of contracting, that is usually done with a performance bond. Bonding company assures that work will be completed. Most small builders that I know of dont usually issue these.

You also may want to put into the contract verbage some insurance requirements i.e. General laibility, workers comp, umbrella, etc.


All reasons to go visit an attorney.

 

[California]

The last couple of posts point out something that might not be obvious on a first-time project.

You are going to design as you go along to cover features that were overlooked in advance, and change what was specified in the contract, many times as the job progresses. Each change isn't a crisis, just an event. Your contractor is experienced in handling these changes. Talk to him in advance and anticipate an orderly change process that covers his ordinary cost and profit as things change. You might be able to buy a car on a rigid contract, but not a house.

 

[Kendall69]

Ummm, wow. Who knew? A million posts, tons of advice, all useless. Muhammad, shut down your servers.

Cm on snowridge either read or understand my post PLEASE!. My advice pertained ENTIRELY to giving contractual advice to ANYONE....NOT and I will repeat it so it sinks in this time NOT disparaging any advice by anyone here about TRACTORS.

I hope that's clear enough for you.

I disagree with Kendall and getting an attorney involved. All that will do is cost you more money up front, and probably lose you a contractor

And as far as lawyers costing too much, popycock. How about FREE, yep you heard me, I walked into a lawyer I never talked to before to look over some closing papers, he looked at them said they were fine and good bye...I said what do I owe you, he said nothing. Others have charged from $100.00 to $500.00 to either write or read a contract.

Remember these guys all have these contracts stored in their word processor, all they do is change the name and date and spit out a contract.

You never know what it costs till you ASK, and most often the first conversation is also FREE, but to arbitrarily claim all lawyers cost too much is shortsighted.

Now as far as losing a contractor - my point EXACTLY another benefit for USING a lawyer. If a contractor runs away from an attorney, it's only because he won't be able to screw you. So PLEASE RUN FAR FAR AWAY!

I have NEVER had a legitimate contractor run from an attorney, but I have had some sleezy scum, run far and fast, and I appreciated the attorney even more. I want a contractor to run from my attorney, because that alone tells me every thing about that guy, because the guy that does stay is confident he can do the job and abide by all the rules.

The Attorney will also fight for you with the city or county if they start jerking you around.

Remember the lawyer is there to PROTECT you, and what could possibly be wrong with that. If people don't want protection, than cancel all your auto insurance, and health insurance, and home insurance - after all insurance is expensive also.

Without legal protection you will lose a lot more that the attorney's fees run, and if you don't believe me, watch a couple episodes of Holmes on Holmes, and see how many contractors did poor work, or took all the funds, then ran away.

Do as you wish, but there a lot more people around that have been taken advantage of by contractors unprotected - than protected by attorney's.

.........but the second you modify that contract without your attorney, the entire thing is junk

No what you do is write in the contract hoe "Change orders are handled" Simple clause: This contract will be still be valid, and change orders will be blah, blah, blah. In other words PER CONTRACT LANGUAGE, the main contract will stay in effect, and change orders are new "mini" contracts, simple.

..Most likely, he'll just quite and walk away from the job before losing money on it.

See again the lawyer will help construct a PERFORMANCE BOND ( see again my point is made by Eddie)
A performance bond is a surety bond issued by an insurance company to guarantee satisfactory completion of a project by a contractor.
If he walks YOU ARE PROTECTED - hmmm where have I heard that word before - Oh I know throughout this post.

..So now you win the case because the contractor didn't even show up

This is like shootin fish in a barrel. You win the case because the CONTRACT that was designed to PROTECT you states quite clearly, if you don't show up you are liable for blah, blah, blah, IF you don't finish on time you are liable for blah, blah, blah, You don't get a dime unless you blah, blah, blah.

Chances are most of this won't happen because the lawyer will have helped you select a reliable contractor who follows the rules, is licensed, bonded, etc.etc., and you want nothing less.

 

[SnowRidge]

Cm on snowridge either read or understand my post PLEASE!. My advice pertained ENTIRELY to giving contractual advice to ANYONE....NOT and I will repeat it so it sinks in this time NOT disparaging any advice by anyone here about TRACTORS.

I hope that's clear enough for you.

Here is what is clear to me: A lot of people gave the OP some very good advice, including a very well regarded member who is a GC himself. You disparaged all of that and every member who posted by flatly stating that it was all "useless."

It is one thing to recommend that a contract be run by a lawyer. It is quite another to say that any information that doesn't come from a lawyer is useless.

Also, you may find this definition of interest:

Hyperbole - Wikipedia, the free encyclopedia, especially the final part of the last sentence of the first paragraph.

Cheers

 

[EddieWalker]

Kendall brings up some interesting points about hiring a lawyer, but fails to explain what the lawyer is actually going to accomplish. All a lawyer can do is draw up a contract. He has no authority to enforce it.

If a lawyer, or anybody else tells me to do something, I have the option of doing it, or not. If they don't like it, they can take me to court. The judge can decide one way or another. What most lawyers are good at is threatening and intimidating, but in the end, that's about it. The problem with the home is not being fixed, and could take years to get fixed.

Having a lawyer select a contractor is a new one for me. I didn't realize that there are lawyers who do that sort of thing. I wonder what they do for their screening process? Just guessing, but do we realy think the contractor that the lawyer finds is going to give you the best value for your dollar?

I will only speek for myself, but if a client wants to bring in a lawyer before hiring me, then I'll listen to what he has to say. If it's going to be a pain in the but, I'm not interested. If it's a straight job that's normal without any BS to it, I'll consider taking the job. It's the same if a person doesn't have a lawyer. I'm not into playing games, power trips or wasting my time. I don't have to do any job that I don't want to. It's why I'm self employed.

If it's just about being careful, the banks that I've dealt with all have standard forms and a contract that I sign as the General Contractor when my clients get their loans. I agree to certain payment arangments and lien issues if I don't get paid.

From what Kendall is describing, it sounds more like a government commercial contract, then a homeowner type contract. He mentions his free advice, but sort of omits what it will cost to go to court to enforce the contract and make the contractor do what he's obviousy reluctant to do.

The contracts that I've read and been a part of all deal with payment and fee schedules. None have been about performance, or timing. Weather and getting a client to make a decision, or even worse, stick with a decision are what delays a project more then anything. The last house I just built was took two months longer then planned and was over budget by $20,000. Everything I told them that I'd do, I did under budget, but they kept making changes and upgrades. We also had the wettest winter in decades. It's all part of building their dream. No lawyers or anybody else is needed for that, just the client and me to make it happen.

I honestly don't know enough about the industry to say if a lawyer is a good thing or not. I'm sure for some, piece of mind is worth any price. I just don't understand, nor see any advantage to hiring one for a home or homeowner project.

Eddie

 

[midcarolina]

I am a licensed mechanical contractor.
First insist on a minimum of three references from past cutomers

I think a 1/3,1/3,1/3 is fair, just make sure when you pay for work be sure it has actually been completed.

have any changes in writing, priced and signed by both parties no matter how small the changes seem.

Your contract needs to address possible change orders with the acceptable overhead and profit spelled out.

Substantial completion is everything except punch list items, 10% retainage covers the punch list items.

You can go here Find legal forms, contractors forms, legal software, human resources forms and business plan software at Socrates.com and get all the forms you need or go to an office supply store and buy the CD

 

[Kendall69]

..stating that it was all "useless."

Obviously you still don't "get it"

Yes all LEGAL ADVICE from laypeople, who live in any other part of the county and NOT the posters state or County is useless.

Why useless, because the law is the law is the law. Getting information from a bunch of good ole boys on a tractor site, ME INCLUDED, is useless when it come to the law...WHY YOU MAY ASK, because we are NOT LAWYERS WHO PRACTICE IN THE POSTERS STATE.

Get it, we the TRACTOR POSTERS are not qualified, nor is it legal to give legal advice, since we are not lawyers - and that's the advice the poster needs., not " I heard one time about..., or I had a guy tell me about this guy who.., or the classic I remember 20 years ago we......

Any useless advice like this is doing a disservice to this site and to the poster, and often time posters take what is spewed on the net as Gospel, and get in trouble. That's the bad thing about the net, unqualified "experts" on everything.

We are qualified to give advice BETTER THAN ANYONE ELSE, ( including lawyers) about tractors and other great information and experiences, but t THE LAW - NO WAY! ...Does anyone seriously want to argue that NON LAWYERS, should be giving legal advice...HUH!


ONE MORE TINE: Then I'm through trying to hammer this in. Get legal advice from a lawyer NOT from ANYONE I repeat ANYONE on the ENTIRE INTERNET, as it will be USELESS as it is concerned to your particular situation, in your particular state. It's useless until a lawyer approves every syllable is approver.

Example:
"It depends on what the meaning of the words 'is' is." 烹ill Clinton, during his 1998 grand jury testimony on the Monica Lewinsky affair

What next, should we be giving advice about brain surgery here, and have that taken seriously?

I seriously doubt anyone here is "disparaged" because I am advocating that they can not give legal advice, and that their advice INCLUDING MINE is useless - nice try.