Acquiring Bond

d-rez

I am trying to finish negotiations with a HO regarding the contract for an addition. This job is about $120k. He is a lawyer. He first told me that the property code 'requires' HO to retain 10% against liens for length of job. What he didn't count on, I believe, is that I would look it up myself and that my father is an attorney as well, who I consult. The code does not say 'require', is says HO 'shall' retain 10% of total job cost, OR 10% of each draw for 30 days. I explained To HO I simply could not finance his job (while he collects intrest on the 10% which is not really his) but I could do the second, which gives him 30 days to catch anything that was missed by himself, architect, AND bank agent after I got each draw. He is now asking I retain a bond against liens. I have never done this and have no idea where to get one, any help???? Do I talk to my insurance co.? Yes, he sounds like he may be a PITA but this is my only job on board and y'all know how the market is slowing, I can't loose this one. I find it ironic that he has asked me to ammend several articles in my contract which seem to be based on a mistrust on his part, while he blatently LIED about the retainage code. Chris

Tmrrptr

Seems to me things are not starting out well with the client.
Chances are, they will finish poorly.

It's not the 10% that's the problem, it's the abrasive circumstances.

I understand work is slow, and that you now have an investment in the job,
but can you wait 'til the matter gets through a small claims action a couple years from now to finally get your money?

You do what you do best, so does he.

If you're still in a negotiation phase, re-write everything 30% higher, with very generous draw schedule for yourself, and give him his 10% retention.

Good luck.
r

copusbuilder

It can be tough when you feel your back is against the wall. I agree with Tnnnrrttttppp or whatever it is Sounds like a bad start and likely to get worse.
That would be my gut feeling from what you have said?

Good luck with it if you go?

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deckman22

There are a lot of scumbag lawyers in Austin, at least from my experience. What's your father's advice on this issue?

My bro-n-law is an independent insurance agent in Corpus. I can ask him if he knows of someone in Austin that can help you. If so PM your email.

At very least jack up your rate to cover the bond.

neolitic

I'd put in an add on for the bond, and another for your dad's retainer.
You need dad on your shoulder every day with this shyster.
My worst customer ever was a judge, who taught law classes.
It wasn't a construction project, it was on-going litigation.
You should rely on your dad's take on this clown, but mine is that he's a high priced dead beat to-be.

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d-rez

More info just for fun. As I mentioned, he is a lawyer. And he is having me re-write many of the articles in my contract. What I didn't say is that he is the City of Austin's architect lawyer, and my contract is an AIA contract! For the process of signing, I usualy will drop the contract off at a client's house and split for lunch, or they may keep it overnight to review. I leave so there is no pressure to review it quickly, while I am standing over their shoulder. This guy has had it for over three weeks! And yes, I informed him the price was no longer valid, going up of course. But I digress, my original question is: how do I get a bond? Or, through whom? Thanks.

Bob Kovacs

Talk to your insurance company- many of them also handle bonding, or will put you in touch with a bonding company. A 100% payment and performance bond will probably cost you somewhere around 1.5-2.5% of the job if you've never been bonded before- more if you've got credit issues. You simply find out what that bond rate is, and add it to the cost of the project.

BTW- what "code" requires you to have retention held?? I can understand your contract mentioning it if you're using an AIA contract, but the building code (or "property code" as you call it) has no jurisdiction over contracts and payment terms.

d-rez

You are correct, Bob. Nothing to do with the building code. It's the property code, or statute. And, my contract does not have the retainer clause, he wants me to add one.

send_it_all

Whatever you do, DO NOT give up your right to lien his property for non-payment.

RizzoMaryland

Lawyers are the worst to work for...and sometimes doctors as well...they want to "understand" why every nail is driven

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Chris Johnson

You can get a bond for this work, it is pricey. I have never been asked for one on residential, but it is common on commercial when the owner is using the banks money solely to build it. Your insurance agent can issue you one. First do the bond application, second if the contract is for 120k you can only get a bond for 60k (50%). Since you have never been bonded before expect the process to take up to 30 days for the first one, you will be checked out 110% by the insurance co. you must have assets (cash/bonds/property) that are valued at or above the bond amount.

This guy sounds like a PITA, watch out for the clauses he will add to contract, such as penalty clause for being late, add to that the bonus for being complete ahead of schedule (Once you do that they drop the penelty clause...happens all the time). Make sure you have hard dates for decisions as well as change orders.

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Kingfisher

Just offer to give him lien waivers showing everything is paid for see if that makes him happy

JumboJack

That usualy works around here...

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in texas with framing and cornish people will do it for 3.00 a foot. What do yall think about that? Just laber

jwbond

It sounds like there is some incorect info being posted on the bond requirement here...Understandable, as there are litteraly thousands of bond types and even after being the business for years, I am still learning.


A lien bond is NOT a perfomance bond, nor are they underwritten like one. A lien bond typically requires 100% collateral. Whenever a bond is fully collateralized I always tell my clients to post a letter of credit instead if possible, as it will save you the money on the bond premium. Why pay the fee on the ILOC and the bond premium if you can just pay for the ILOC?

golter

I am trying to get a construction bond for my new hardwood flooring business (I have been in the field for over 19 years and had my own company for 9 years) due to an ugly divorce, and having to pay $2750.00 per month in child support- I fell behind on some of the payments and now can't get a the bond because of past due child support. Does anyone know of any options I might have?

jwbond

golter,

There are no markets for people with past due child support. Not even the high risk markets will touch you.

Keep in mind a surety bond is largely underwritten on your charactor (the limited information that is available for underwriting anyhow). How can the surety agree to back you when you are behind on child support.


Just to clarify, who is requiring the bond of you?

golter

The CCB... also, to clarify- I have been making regular child support payments... I am in the process of modification and am paying $400 per month- while the modification has been in process- the wheel keeps turning at $2750 per month- they will go back on some of it and I am going into mediation on Monday- I also have a judgment against my ex for over $20K that will hopefully come off the arrearage-.. Thank you for your information

Double-A

Bleh ... I hate retainages. "He who hold the money, holds the power."

He's betting you 10% of the project he call stall you out of a court order to pay longer than you can afford legal counsel to obtain that court order. If you just have to do business with this dink, get the monies put into escrow and define exactly how it is to be paid. It should be an automatic payment after a certain milestone, like substantial completion notification via registered mail to the escrow company.

You let him make the rules, you had best be ready to play by his rules, and lose early and often.

Find another fish. Its Austin for cripes sake, not BFE, Texas. Let him practice his mental one-upsmanship on someone else.

You might also let him know that you will be sending a copy of the revised contract to the Texas State Bar Association as a complaint against his license. It won't amount to much, but all complaints are investigated.

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J-Peffer

Run away,

I know it's the only job on the table right now, that's why you can't afford to loose money on this job.

jwbond

Golter, get it cleared up first and then search for a bond agent.


FYI: If you are in need of a bid/performance bond, then you need to get your credit in good shape as well. This means a score of 650+ with no outstanding public records (tax liens, alimony, collections, etc.). From what I gather this is what you need, as it sounds like this is a bond for a specific contract.

If you are in need of a commercial bond (e.g. contractors license bond) then you can still obtain the bond, even with bad credit, but it still might be more cost effective to go to a credit repair service and then get the bond, as they are not cheap!