New To Subcontracting

Kuba

How much... just kidding

I have worked under a company that did new construction, but Ive never been on the business side of subcontracting.

I was wondering if any of you Subs/GCs might have some information to share (The dos, donts, must knows, process etc, typical contract formalities etc)

Is it normal to treat this contract similar to a Consumer or Commercial entity? What are some of the details involved in this form of contracting that don’t exist with consumer/commercial painting? What do GCs expect to see in a contract other than the obvious – price, scope of word etc? Could someone elaborate on the typical format and concerns regarding subcontracting terms and conditions involved?

Like I said, I have never been a sub before and this concept is 100% new to me. Any info and/or tips would be greatly appreciated. This GC seems very legit and pays cash timely. (That is coming from his electrical sub that is referring me…)

This might be a nice gig for me considering residential repaints are very slow for me right now.. so, with that being said… Educate me guys =)

Thanks

cabinet runner

This is just my 2 cents but I have always subbed from builders big and small and various cabinet showrooms .
Funny thing is I never had a written contract with any of them .Just submitted price sheets and always confirmed their pay schedules .
I do not tolerate ANY deviations from an agreed upon pay schedule .

I always talk to other subs esp plumbers , electricians and drywall as their suppliers will not hesitate to file leins and or cut them off if money problems arise . I also to talk to their lumber supplier . If they can't keep up with say 84 Lumber word gets out quickly and I would focus very hard on collecting money owed and not proceed with anymore work . And all of those companies have lawyers on retainer to deal with deadbeats .
If a GC can't pay a big lumber supplier he ain't worried about paying a small time sub contractor.

Around here when a builder goes under it is a very lenghty process to go after your money and at best you will be forced to settle for pennies on the dollar . Mechanics leins are a tool but if a builder has a 30 day pay schedule you could end up liening a house that is already occupied and not be able to recoup your money until the current owner sells or refinances (could be years ) .

I am not saying you shouldn't have a contract with a builder as it may make you feel better BUT it won't help you get your money if they fold up

The worse thing I have seen happen is guys continuing to work even though they are past due on being paid 10's of thousands of dollars . Just never made sense to me and I don't want to hear about how when they just settle the next 2 houses everyone will be paid in full . A good GC/builder knows how to budget his bank draws and pay subs on the agreed upon date . If they can't they won't be around long .
Your unpaid invoices will be the key .

Lastly do not do any home improvement work without a contract and more importantly a license . In my state if you do home improvements without a license you are commiting a crime and if a homeowner refuses to pay when you are done they will WIN in court regardless of how good of a job you did . The judge will throw it out the minute you admit you have no license .

I do not currently hold a home improvement license but I sub through a cabinet showroom that holds a master license . They submit the contract to the homeowner and collect the money for my part of the work and submit my bill based on an previously agreed upon rate . The bad thing about doing it this way is I can only charge a certain amount as they mark up my labor at least 35 % . But they find the work , collect the money and I am paid every 14 days from them .

I am considering getting a license but I always prefered new work and it seems things are picking up around here so I may wait until summer is over to deciede .

Good luck and IMO your best bet dealing with builders is to talk to as many of their subs /suppliers as you can . Good payers have a good pay history and everyone will tell you that . Bad payers will be talked about even more openly . If a builder goes 92 days past due to 84 lumber they start taking the commision back from the salesman on a monthly basis .
When that happens the salesman will tell everyone and anyone about the deadbeat .

buildiq

Generally you will find that as a subcontractor, the GC will draft the contract and you will be expected to sign it and all the conditions contained therein - careful, because sometimes they can be very unfair, eg. sub covers latent conditions.

However, in your case, and as the above poster stated, often a builder will rely on a simple purchase order to get the works underway. If all you're doing is a small labour only paint job for say $10,000, it's unlikely a GC will bother with a contract for you. Preparing and then negotiating a subcontract takes a lot of time and money, and sometimes you're better off relying on the handshake. It really does depend on so much.

If you have a more specfic question I might be able to be a bit more helpful.

Five Star

Most GC or builders make you sign a lien waiver up front,so your srewed there!
basically they are gonna have you by the balls!

you will be 2-3-4 jobs ahead and still waiting to get paid!

i was a sub when i first started and still sub for a few well reputation show rooms installing cabs!

when times are like this you better off working by the hour for builders,they pay workers comp,disability,etc. when times get better then you should look at finding your own jobs and or sub contract!! JMO

__________________

Kuba

I hardly think that would be 100%... But, if that is the case, then some hack can have the work and the GC can live with the ****-ups & headaches Signing a lien waver up front is like bending over and yelling "do me!"... no, isnt gona happen.. Ill sign one after ive been paid - per spec...

.

I have a lawyer =)... It is what it is. One thing is certain, i wont work without a mutual agreement/contract. Actually it is now illegal in the state of PA to work without one as of June 1st I think...

Thanks for the info guys, something to think about.. Anyone else have something to add? Im all ears, well eyes

buildiq

Nice work, a contract is the most important tool you'll ever have on a job. Make sure your lawyer has at least some (preferably lots) previous experience in construction law.

Get your insurances, licences and get out there on the tools. Work on a marketing plan to find the good GCs and never stop learning!

Bob Kovacs

Actually, the new regs in PA are geared toward contracts between a contractor and a homeowner- they don't address the issues between subs and GC's. They're basically "consumer protection" requirements.

antnepi

I am almost certain that here in Delaware you can not sign away your lein rights. In my experience the builder will send over their "master agreement" and you have to initial every page. Most times they do not put their payment schedule in their agreement. A lot of the time if they don't pay and you put them on "credit hold" they will try and work with you by making empty promises. It is a real PITA to get a new vendor to replace you in the middle of a project when they have settlements in the coming weeks. In some cases they just will not pay you and get someone to come in and then back charge you for not doing the work. I can't stand working for large builders. That is why I don't do it any more. They treat you like the bank. They expect you to finance the project.

Kuba

awesome info guys, thank you very much!

naptown CR

And you are breaking Maryland law which states that you are required to hold a MHIC subcontractors license to subcontract home improvement work.