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Having Customers Pay Subs Directly

 
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Old 08-27-2019, 08:46 AM   #21
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Re: Having Customers Pay Subs Directly


I don't think this is a case of fraud or anything like that at all. I just think Mcconnda has been given some bad advice by his insurance agent (who isn't a contractor) in order to minimize Mcconnda's risk and also to minimize the insurance companies risk of a claim. The less work Mcconda carries on his books, the lower his risk of a problem or claim.

While that is sound advice to keep Mcconnda safe, it is poor advice when it comes to Mcconnda making money. Hiring subs involves a certain amount of risk and as the lead contractor you need to be compensated for that risk, so get a fat mark up on top of their price, run them through your books, manage them and make a profit on them.

You can't possibly do enough work operating solo to make any serious money, so you need to leverage the work of employees and subs to put out more volume, making additional margin for yourself and your business. That's the difference between a contractor and a handyman.
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Old 08-27-2019, 04:13 PM   #22
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Re: Having Customers Pay Subs Directly


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Originally Posted by KAP View Post
Whoever is writing the check is who the sub-contractor is contracted with... hence, sub-contractor...
????
If my contract is with the homeowner, I am not a sub-contractor, but the electrical contractor.

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Old 08-27-2019, 05:08 PM   #23
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Re: Having Customers Pay Subs Directly


This makes logical sense and is straightforward. In MN,however. A General Contractor is responsible/has liability for all other contractors on the job.

So if two gc's are on a job, they both take on liability (technically speaking) of all others.

You can not write a contract to superceded MN law.

This is residential contractor licensing law. I'm not arguing it's great law, I'm just here to enlighten you on MN LAW.

I was fined by a jurisdiction because the homeowner hired an electrician to put in recessed lighting in a tuck under garage after we were finished but moved into the basement phase.

When the electrical inspector came he hauled my as over to ask why the non-fire rated cans were installed. I claimed I finished that phase and moved on.

No, no he exclaimed! Your license as a GC makes you liable to his work as you(as the gc) should know.

I stated that the electrical contractor is the electrical expert, pulled his own permit and was contracted by the HO. He states. It doesn't matter, I as the GC should have known.

MN.

A little aside, contractor continuing education will not delve into electrical or plumbing for GC education, as we might do it ourselves. Yet, we are the last wallet in a lawsuit.

For another day, how MN deals with HO who GC their own home. (Foreshadowing, don't do it).
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Old 08-27-2019, 05:21 PM   #24
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Re: Having Customers Pay Subs Directly


Quote:
Originally Posted by PCI View Post
This makes logical sense and is straightforward. In MN,however. A General Contractor is responsible/has liability for all other contractors on the job.

So if two gc's are on a job, they both take on liability (technically speaking) of all others.

You can not write a contract to superceded MN law.

This is residential contractor licensing law. I'm not arguing it's great law, I'm just here to enlighten you on MN LAW.

I was fined by a jurisdiction because the homeowner hired an electrician to put in recessed lighting in a tuck under garage after we were finished but moved into the basement phase.

When the electrical inspector came he hauled my as over to ask why the non-fire rated cans were installed. I claimed I finished that phase and moved on.

No, no he exclaimed! Your license as a GC makes you liable to his work as you(as the gc) should know.

I stated that the electrical contractor is the electrical expert, pulled his own permit and was contracted by the HO. He states. It doesn't matter, I as the GC should have known.

MN.

A little aside, contractor continuing education will not delve into electrical or plumbing for GC education, as we might do it ourselves. Yet, we are the last wallet in a lawsuit.

For another day, how MN deals with HO who GC their own home. (Foreshadowing, don't do it).

Now certainly you can write in your contract not allowing subs from outside by the home owner? However the home owner can request to pay your subs directly, correct? Or is it all that special kind of stupid upper midwest (MN&WI specifically) write a new rule to solve a small problem, effect everyone and results being fork everybody in the process - f/u thinking?
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Old 08-27-2019, 05:33 PM   #25
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Re: Having Customers Pay Subs Directly


Texas wax and Mike from before, yes you can write in your contract that no other contractors will be present on site until you are completely done and the permit is closed out!

Yes I get this and do this. I also have declined several jobs where there were code violations from previous subs/contractors/friends or HO in plain site.

I'm just saying how MN contractor law works.
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Old 08-27-2019, 05:34 PM   #26
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Re: Having Customers Pay Subs Directly


Quote:
Originally Posted by PCI View Post
This makes logical sense and is straightforward. In MN,however. A General Contractor is responsible/has liability for all other contractors on the job.

So if two gc's are on a job, they both take on liability (technically speaking) of all others.

You can not write a contract to superceded MN law.

This is residential contractor licensing law. I'm not arguing it's great law, I'm just here to enlighten you on MN LAW.

I was fined by a jurisdiction because the homeowner hired an electrician to put in recessed lighting in a tuck under garage after we were finished but moved into the basement phase.

When the electrical inspector came he hauled my as over to ask why the non-fire rated cans were installed. I claimed I finished that phase and moved on.

No, no he exclaimed! Your license as a GC makes you liable to his work as you(as the gc) should know.

I stated that the electrical contractor is the electrical expert, pulled his own permit and was contracted by the HO. He states. It doesn't matter, I as the GC should have known.

MN.

A little aside, contractor continuing education will not delve into electrical or plumbing for GC education, as we might do it ourselves. Yet, we are the last wallet in a lawsuit.

For another day, how MN deals with HO who GC their own home. (Foreshadowing, don't do it).


Great then you will have a Minnesota law or code to back it up. Just because an inspector said it, doesn't mean he's right. Nor does it mean you're responsible for someone hired by the HO.


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Old 08-27-2019, 09:24 PM   #27
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Re: Having Customers Pay Subs Directly


Quote:
Originally Posted by TxElectrician View Post
????
If my contract is with the homeowner, I am not a sub-contractor, but the electrical contractor.

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Your payment is subordinate to them... they've subbed the work to you, whether you're an electrician, landscaper, plumber, etc...

I may be the GC on the job, but if a HO subs out a portion of the project (to their cousin, the electrician, for example), they are not legally under my control nor considered my liability... they are a separate deal altogether...

Last edited by KAP; 08-27-2019 at 09:29 PM.
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Old 08-27-2019, 10:33 PM   #28
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Re: Having Customers Pay Subs Directly


I don't have a right to tell a home owner who they can have work on their home. Regardless of what they hired me to do. Unless they've agreed to delegate all job supervision to me. But they don't have to.

So that being the case I can't possibly be responsible for someone I have zero legal control over.


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Old 08-30-2019, 06:39 PM   #29
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Re: Having Customers Pay Subs Directly


man , i`m surprised no one said this yet :

the way you do it is ,every sub has to send you current license and liability certificate for each job showing that job address as the insured .
used to do it all the time

when i had a crew and was bigger i used to tell my wife who made up the contracts , and kept all my paperwork in order :
" set us up like we`re gonna get sued on every job!. cover our ass.
get everyone's insurance and license , every single job."
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Old 08-30-2019, 06:56 PM   #30
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Re: Having Customers Pay Subs Directly


Quote:
Originally Posted by TxElectrician View Post
????
If my contract is with the homeowner, I am not a sub-contractor, but the electrical contractor.

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if you have a contract with a homeowner you are likely the prime contractor.

as the prime you could have a general contractor as a sub to you.
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Old 08-31-2019, 11:57 AM   #31
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Re: Having Customers Pay Subs Directly


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if you have a contract with a homeowner you are likely the prime contractor.

as the prime you could have a general contractor as a sub to you.
but if its a permitted job , the g.c carries the master permit , and all subs get their permit off that master permit number
the city looks at the g.c. as the " general" , and look at him being responsible if there's any issues.
they won`t want a situation where there are a bunch of chiefs on one job site .
they want that one person to blame, not have to sift through the debri to figure it out .
it better for the city , its better for the home owner
they really don`t care whats better for us
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Old 08-31-2019, 12:01 PM   #32
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Re: Having Customers Pay Subs Directly


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but if its a permitted job , the g.c carries the master permit , and all subs get their permit off that master permit number
the city looks at the g.c. as the " general" , and look at him being responsible if there's any issues.
they won`t want a situation where there are a bunch of chiefs on one job site .
they want that one person to blame, not have to sift through the debri to figure it out .
it better for the city , its better for the home owner
they really don`t care whats better for us
so you are saying only a gc can pull a permit?
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Old 08-31-2019, 12:22 PM   #33
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Re: Having Customers Pay Subs Directly


I don't pull permits for anyone not under my control.


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Old 08-31-2019, 12:24 PM   #34
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Re: Having Customers Pay Subs Directly


The city can't demand I pull Permit for any work I'm not doing. Matters none that they rather have under one permit.


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