100 Percent Upfront?

artinall

There is this customer you see, that wanted to go ahead with a project until a financial unforeseeable occurred.

This has turned into continual delays in getting the project started.

Making me question whether payment in full will be made when the job is done.

Normally I go with the customary 1/3 down. But, as is probably obvious, I think I have reason to not be comfortable with this.

Too, due to the general current business atmosphere, is it legal to get everything upfront before starting?

Virg

i cant imagine anyone paying you 100 percent up front. they would be a complete fool in my mind. I know where you are coming from though. sometimes there is this feeling that every draw will be like pulling teeth

artinall

its not the draw, it is the growing prospect of not getting paid in full

22rifle

I remember a job where the HO showed up the first day of the plumbing rough in (never dealt with them before), wrote out a check for the rough in. Then said, "Hey, I don't want to mess with this." And wrote out a check for the plumbing trim out too.

That doesn't help you I know. Just thought it might be interesting.

Best of luck to you.

Susan Betz

Escrow. Set it up with a bank. You get paid normally, the money is assured. There's a fee, but it sounds like it's worth the cost.

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Dan_Watson

Can you re-upload the picture, I cant see the customer.

Cole

Ding Ding, in this situation I would set up escrow without even blinking.

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artinall

set up and escrow - where homeowner deposits money in protected account?

then when job is done, what type of mechanism constitutes acceptance of finished product in order to release the payment to me?

Susan Betz

Talk to the bank about the process. It's somewhat similar to a construction loan from the contractor's point of view. They'll give you all the details.

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genecarp

should we not know the amount of the contract before giving advice? your going to set up an escrow account for 1500 dollars?. if it is a small job paid in full upfront is not as crazy to request.

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MacRoadie

Under California law, it is illegal to require a down payment of more than 10% or $1,000.00, whichever is less. For swimming pools, the number drops down to $200.00.

It takes a creative schedule of values, but you can often work it out such that you can have a good sized first progress payment, especially if you are ordering large quantities of materials or custom materials (cabinets, etc). The hurdle is that by law that first progress payment can only be applied for after the quanitity of work represented by the payment request has been verifiably completed .

There's no way on earth however, that you'll get 100% up front here in the Golden State. It's the most common citation issued by the CSLB and the easiest way to get your license suspended.

artinall

there are (2) jobs

- one is $1800

- another is $5900

checked with my bank today & they don't do escrow unless it is mortage-related.

genecarp

art, the best advice i can give in this situaton is, follow your gut, who wants to do a job, that going in you think you might not get paid, i would pass.

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thom

use a payment schedule that covers your ass. Always stay in front. Stop if they don't make a progress payment immediately when due. If you aren't sure, make that last payment really small. Could be $100.

DavidC

Just for the sake of mentioning it, if your customer was buying from one of the big boxes they would be paying in full up front before anything was ordered or scheduled. I have often wondered how and if they get away with it in California.

I'm not a big box myself so lean more towards thom's advice. Adding just to make sure you use a good and enforceable contract. Your attorney can help with that if you need one.

Good Luck
Dave

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www.CookContractingLLC.com

BreyerConstruct

Accept credit cards, and offer financing.
Regardless, realize that YOU might be offering the financing, even if you don't want to.

If a customer balks at a final payment, see if you can "feel them out" to see what their concerns are. Offer to break the final payment up, if needed- ask when their payday is... bater for services. You prolly get the idea.

If you need the work, take it, but be prepared to get creative, if you need to. Keep in close contact with the HO, make sure they can't drift away, or start imagining things about you.

Best wishes,
~Matt

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artinall

Beyond this, is of course the mechanic lien process. (non-payment)

For some states, it isn't as easy as before, when you simply filed it.

Now many states have a defined procedure for 1st giving notice to the owner beforehand ...and so on

And contractors can be held liable for breaches in the process.

-Not sure about Ohio.

But this can be very effective for getting any monies due, more so if the structure is headed for market.

Appreciate the posts. Although some want to assume the homeowner wants to work things out in a healthy and constructive way -- meaning that there is a given that certain homeowners meet the contractor with a level of honesty. Which is admirable. And this is what you want to attract. But recently trust has been in question a number of times in non-payment related areas, with several homeowners, which concerns me.

wellbuilthome

If i liked the people I could risk 8000 gs if i need the work . I have 2 people on the wellbuilt easy payment program from last year . They ran out of money . It could happen

excellencee

Personally, I don't need any work that bad to work for free. The list of people who want me to work for free is very long...you can't just jump to the front of that line.

Kaabi

I think you should determine whether a customer should pay half or full or whatever based on the customer's financial history and their personality.