How much to pay a contractor? [Archive] - Ceramic Tile Advice Forums - John Bridge Ceramic Tile


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02-21-2010, 01:04 PM
We are going to renovate the bathroom, the dining room and the kitchen. My husband and I interviewed 4 contractors. Only one of them gave me the estimate and I am waiting for the other 3. He told me to pay in this way:

Payment to be made as follows:

Upon signing 5,500.00

Upon start 15,000.00

Upon completion 15,000.00

Upon completion 5,000.00

Upon completion 5,000.00

Please let me know if is correct.

I live in NY. The contractor gave me a list with his clients. Around 50. I called his clients and they talked very nice about his work. Actually he his the contractor, the busyness owner and he has a foreman + plumber, electrician, tile guy, painter. He seems really professional and very knowledgeable. My condo is about 900square feet and we are going to renovate about 400 square feet: the kitchen, the dining and the bathroom. He is going to charge 45,500. Below is the list with what he wants to do:
Hall Bathroom

* Demolish existing bathroom to stud
* Reframe wall to extend bathroom
* Install new window *
* Install new bathroom door and hardware *
* Install new insulation for exterior wall
* Install sound deadening insulation for interior bedroom
* Install new updated electrical
* Install vanity lights*
* Install new vent *
* Install 3- 6 lights
* Install GFI
* Install new shower body *
* Install and relocate new small tub and waste *
* Install new toilet *
* Install new sink and faucet *
* Install mirror or medicine cabinet *
* Install new green board and concrete board
* Install mud floor
* Install new ceramic floor tile *
* Install new ceramic wall tile *
* Install bath accessories *
* Install new cabinet and pedestal *
* Install new door and window trim
* Plaster to finish coat
* Paint


* Demolish existing kitchen
* Frame out kitchen as per plan provided
* Install new window *
* Cut in new waste; waster; and vent
* Install new insulation
* Install new electrical wiring for all dedicated appliances and circuits
* Install under cabinet lights *
* Install new receptacles as per plan provided
* Install 6 new recessed ceiling lights
* Install new roughing for all sinks, appliances
* Install new dishwasher; refrigerator; sink; faucet; oven; range; microwave; hood *
* Install new vent
* Install sheetrock
* Plaster and tape to finish coat
* Paint
* Install new tile backsplash *
* Install new ceramic floor *
* Install new cabinets, hardware and trim *

Dinning Room

* Remove floor
* Remove walls
* Remove trim
* Remove plaster over brick wall

Allowance: 1500.00 for plaster removal of wall; brick repair if any to be determined and is not included

* Install new sheetrock
* Install new trim *
* Install new tile floor
* Grout and seal
* Install new chandelier *

Electrical Panel

* Upgrade electrical panel in existing location

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02-21-2010, 02:10 PM
Does that include materials/cabinets etc? If so, $45K it sounds cheap to me.

Shawn Prentice
02-21-2010, 02:19 PM
Greetings Poliana,

Your question is too vague to answer. You would need specifics on absolutely everything to be able to even come close to an answer, and even that could be debated among different contractors.

I don't know what the rules are in NY, but some states will only allow a certain percentage as a downpayment. If there are no regulations there, then it seems fair to get the job going. But, the other $15K at the start bothers me. You would have essentially paid for half the job before anything is done. Unless, the contractor can justify the need for upfront material expenses, i.e. ordering fixtures, tile, cabinets, etc.

What is half way complete? What is 3/4 complete? Is this spelled out in the contract such as" 3rd payment due at the start of drywall", or, "3rd payment due upon substantial completion of the bathroom"? Otherwise, that point of completion is questionable.

Are there permits being pulled for this job? Are all the trades involved licensed and insured?

Was your condo built before 1978? If it was and the work is starting after April 22, then the contractor must be EPA certified for lead renovation and follow strict guidelines, as does, every sub he has in during demolition.

You say you called some of his old clients, but did you go and look at the work? What one person thinks is great work, another thinks is shoddy. Whenever I use a new sub, I look at recent work, older work, and I talk to every reference given. I like to know that the contractor has consistently done quality work, that it lasts, and that their former customers would use them again.

Do you have specs for all the products that will be installed (fixtures, lighting, etc.) and construction details for aspects such as the shower (mud floor details, waterproofing methods, setting materials, type of grout, sealer, etc), kitchen floor assembly, what quality of drywall finish, what quality of paint, insulation for exterior walls, proper vapor barrier, etc., etc.? You can't leave anything to question on a detailed job like this. You need to know everything you are paying for up front, the quality of the materials being used, and that they will be installed properly (according to each manufacturers instructions.)

That should be enough to get you started. I'm not saying anything negative or positive about this contractor, but rather giving you some important things to look for in the person you will trust to do your project.

02-21-2010, 02:24 PM
The recessed lights are included.

I will pay for the cabinets, bathtub, the hardware, the sink, the vanity - around 30,000.

Shawn Prentice
02-21-2010, 02:27 PM
So why does he need almost half the cost of the job before he starts if you are providing the big ticket items?

02-21-2010, 02:29 PM
I didn't ask him. It's my first renovation and I am learning and learning.

02-21-2010, 03:54 PM
So why does he need almost half the cost of the job before he startsto buy the material.

Shawn Prentice
02-21-2010, 04:58 PM
I don't buy it. That type of work is what I do and there isn't $20,500 in materials on the contractors end for that job. Maybe with subs labor included, but nothing will have been done by the time she's paid almost 50% of the contract price. The payment schedule should be set so the contractor is at or a bit ahead of the value of the work completed. That way it is safe and fair for both the contractor and client.

Any sub that wants 50% down before they start won't be working for me, not with the way things are today. Too many companies are going out of business. Many GC's can't/aren't paying their subs. Many subs aren't paying their suppliers and liens are being placed on the unsuspecting customer's home by the suppliers. If the sub needs a deposit or full payment on special order materials, then that's a different story.

Scottish Tile and Stone
02-21-2010, 05:11 PM
Shawn, how does any sub know you are going to pay them?

Shawn Prentice
02-21-2010, 05:50 PM
First, I've been in business long enough to have developed trusting relationships.

Second, Contracts. Same thing that lets me know the client will pay me. Though, if the client doesn't pay me, my sub still gets paid because I don't get into jobs I can't afford to run. If you don't have enough capital to operate the job, then you should be doing them. I'm not saying I pay for the job, but I can if I need to. That's the reason you stay at or a bit ahead of your costs, so if there are problems, your not in the hole as bad.

I give draws when requested, but I don't pre-pay for work. On larger jobs, my plumber and electrician invoice me for 60% only after the rough-in is completed. Then the balance when they are completely finished. Most everyone else bills when the job is finished, unless they have a lot out in materials.

If the contractor above is paying that much or close to it out-of-pocket before he starts, then it is fair. But from what the OP says, she's buying all the big ticket items.

Shawn Prentice
02-21-2010, 05:57 PM
And I'm not saying I don't give deposits or take them, but I'm not giving 50% before the job starts unless it's justified.

I was looking at another plumber last year who wanted 80% before starting. Sorry, but no. If you want 80% after rough-in whenthe tub is in, then yes.

02-21-2010, 06:18 PM
Yup, small jobs I get paid when im done, big jobs are done in phases, deposit depends on materials needed, Draws acceptable when there are delays on customers end.
Thats not a big job to justify that kinda money and deposit. But if its the city its also alot more expensive to work too.

02-21-2010, 06:29 PM
I'm typically getting 1/3-1/2 up front, depending on the materials I'll be supplying. I'm not finanacing someone's remodel.

02-21-2010, 06:57 PM
There's no law here in NY about maximum deposits, a $5K deposit on a $75K remodel doesnt seem ludicrous. As a business owner, I want to be sure the customer isnt going to call me the night before we start and cancel. That would ruin my schedule and cost me a lot of money.

As far as getting $15K at the start of the job, again I see nothing wrong with it. The contractor is tearing out half of the Condo... Why should he have to finance the project? The money should be in his account to cover the plumber, electrician, employees, his own salary, his overhead, and the materials.

Is it possible for the contractor to screw over the homeowner and run away with her money? Sure.. It's also possible the homeowners check might bounce after he already completed most of the project. Everything in life has some risk. She researched this contractor and feels comfortable with him. Hopefully there's a good contract in effect to protect both parties if something should go south.

Shawn, you have to change your position on this if you want to grow your business. After you run out of money a few times, you'll learn to get money up front too.. Guess how I know... :cry:

Shawn Prentice
02-21-2010, 07:31 PM
I appreciate the input Alex.

I always get money up front, deposit then start payment, but no more than necessary to get the job going. Then draws are coordinated with specific completion points which leads to invoicing from my subs. I always keep up to date on payments such that I am at or a little ahead of the value of the work completed.

Yes, it is a 75K remodel, but from what the OP said she is paying the contractor 45.5K and the other 30K for materials directly. I have no problem with the deposit (and mine are non-refundable for the reason you mentioned), but I am saying that unless it is justified, getting paid almost 50% before any work has been done on a job like this would raise questions for me.

The only job I could or would take that kind of upfront payment on would be one with special order materials, otherwise it doesn't happen around here. Everyone does things differently. If some contractors can do it that way and the client is fine with it, then that's great.

02-21-2010, 08:31 PM

Way to make the customer feel all nervous now!:clap2::tup2:

02-21-2010, 08:59 PM
I am not uncomfortable. Maybe a bit. I checked 8 contractors and I like three or two. We'll see.

Shawn Prentice
02-21-2010, 09:14 PM
I'm not trying to make you uncomfortable, just an informed buyer. You are the boss and it will serve you well to learn as much as you can about proper procedures of the projects you will have done. You are well on your way with this and the other thread about the floors. Keep it up and everything will turn out just fine.

I noticed from the other thread your home was built in 1925. Any work after April 22 next month will have to be done according to the EPA lead renovation guidelines.

It is important that whichever contractor you choose is certified and ready to comply with the new rules to protect you, your family, and the workers from lead dust that will undoubtedly be released. You will certainly be on the right track if some of the contractors you like are already certified. It will show you that they care about the health of their clients and themselves, as well as, following the rules.

02-21-2010, 09:56 PM
This lady is looking at paying 45,000 just in labor to do three small rooms.

Hey I mean hats off to the contractor if he can make that kinda of money and have happy customers...hes a better man then me.

But he's not the one who is asking advice...Poliana is. And I'm saying that she should be able to get that kinda of basic remodeling done alot cheaper.

Why should she pay a general contractor and his expenses? The only thing he brings to the table is his contacts to good sub-contractors and a hefty mark-up.

All she needs is a decent carpenter and good mudman(someone from here) and a painter. She can only do so much at a time anyways. Pay the carpenter by the day the other two by bid. Unless they spend three months on the job she will save alot of money.

Im doing the same work right now on one of my properties..all new electric service,all new plumbing,gutted whole bath and one kith wall,sheetrock,new kith,new bath,moved walls, added walls,new floors,trimwork the whole nine..just me and a guy I pay to help me...Ive only paid out 2000 in labor so far and all i got left is paint and tile/laminate left to do..three more good days. And im not even there as much as he is. I know it may not exactly be same thing but thats a big price difference.

Two or three guys and one month...15000 to 20000 is more realistic for labor

02-22-2010, 06:11 AM
Why should she pay a general contractor and his expenses? The only thing he brings to the table is his contacts to good sub-contractors and a hefty mark-up.

All she needs is a decent carpenter and good mudman(someone from here) and a painter. She can only do so much at a time anyways. Pay the carpenter by the day the other two by bid. Unless they spend three months on the job she will save alot of money.

Wow... Im speechless... that's the dumbest thing I ever heard another contractor say...

Sorry, but it's true.

02-22-2010, 06:53 AM
Hey Jim,
Which one is going to do the complete electrical and plumbing, the painter? The tileguy? Oh, I know, the carpenter, yeah, that's it...:bonk:

02-22-2010, 08:03 AM
Jim I think pricing in NYC is a little higher that other areas. This is common in Big cities. I have worked for Home owners who wanted to be their own General Contractor and cut out the middleman. They are the worst run jobsites around and nearly never get finished to satisfaction. Oh and did I mention I have worked for LOTS of them.

02-22-2010, 08:18 AM
I got the quotes from two contractors. Both were $45,000. I was really surprised. I prefer to hire a professional contractor for the kitchen, dining and bath. For the living and bedroom I will hire a carpenter by the hour. Jim thanks for the advice. I wanted to hire people by myself and supervise the team. But I realized that is not really easy.

02-23-2010, 06:58 AM
Ok guys. I got a third quote. I added some work and the quote is higher than the other two. Now is @56,300. The guys wants me to pay in this way:

- $26,650 deposit
- $26,650 for installation of the kitchen
- 3000 upon completion.

I am really confused about the whole thing. You guys, here on this forum, say something else and in the real life contractors ask for the payment in different way.

02-23-2010, 07:17 AM

There is no set standard for payment schedules. I dont even follow the same routine for every customer. I have a few repeat customers that I just take a reasonable deposit, and get the rest when I'm done.

If you're uncomfortable with two large payments, ask if you can break it up into 4 or 5. I know I have a little difficulty asking customers for money, but if I knew they were expecting me to come for the check every week, I'd feel more at ease. (Im a better mechanic than I am a businessman sometimes)

02-23-2010, 07:21 AM
The contractors who gave me those estimates are professionals ones. I will ask them to divide the payments.

02-23-2010, 07:47 AM
Hold at least 10% (33% is better) as a completion retainer. 5% is too easy to walk away from.

02-23-2010, 07:48 AM
Personally, I think 3000 upon completion is a joke on a 50k+ job. If they screw up, good luck getting them back for 3k.

02-23-2010, 07:48 AM
Bob beat me to it. I have seen this happen enough to know not to agree to those terms.

02-23-2010, 07:57 AM
I am a landscape designer and I do almost the same. 50% deposit and 50% after completion.

02-23-2010, 08:14 AM
Maybe here in Westchester county people charge in this way. I interviewed 8 contractors. I believe is enough. The quotes are almost the same, they ask for the payments in the same way.

John Bridge
02-23-2010, 08:17 AM
Poliana, :)

I've stayed out of this. I think you're getting good advice insofar as holding more money during the life of the contract. It seems to me that some of the contractors are asking too much up front, and you should certainly have more than $3000 in your purse when the project is complete. I would think long and hard before giving anyone over $20,000 before anything has been done. Now if materials have been delivered, permits obtained, that's different.

I don't think anyone should be paid way more than the value of the work and materials at any time. Make them justify the payment schedule. :)

02-23-2010, 08:26 AM
If everybody asks for 20,000 up front then what should I do? Already they asked in this way....

02-23-2010, 08:44 AM
I think you need to get a time schedule from them. How many weeks to get to this point ect./ The upfront is a bit hefty but working in NY is very different then in other parts of the country. The price seems fair. The one thing you want to find out is if the company you hired will be the ones doing the work. Will they be there every day to supervise. How many subs will be there and if everyone on the job is licensed and insured. The one thing you dont want is a contractor taking that huge sum of money from you and hiring illegal workers. (Happened to my sister) Right now in NY they are cracking down on illegals and your condo could be seized if the contractor is not legit. The one other thing you better look into is your condo bylaws. Some have strict rules that contractors have to follow, and if they dont, you will be liable for any penalties incurred.

02-23-2010, 09:09 AM
Imagine that 4 contractors gave me the same cost for the work. I checked with the condo management and I know the rules. The contractors that I want to hire have license, everything. I am only worried about the payments. Why they asked me for such a big amount up front? I have to talk with them.

02-23-2010, 09:21 AM
If everybody asks for 20,000 up front then what should I do? Already they asked in this way....

All details of a contract can be negotiated. If the payment terms they are proposing are very standard (for them), and they have lots of backlog work, they may be unwilling to make any changes to accomodate you. However, it never hurts to ask for what you want. Be polite so that you don't jepordize a positive relationship, but express your concern, and request the modification. How they respond may help you feel more comfortable with your final decision.

Tool Guy - Kg
02-23-2010, 09:44 AM
For me, I'd want that price broken into more pieces. If you're comfortable with the overall price, I'd simply express that you're uncomfortable with the money schedule as proposed and you'd like to get comfortable before signing and proceeding. I'd seriously ask for a rough time schedule of how they are envisioning the project to proceed. Ask the contractor to highlight natural progress points along the way and divide the payments so they coincide with the progress (as a contractor, I'd explain that the actual progress might not be as "neatly divided" as what the schedule reads so that everyone can be fair in keeping the payments commensurate with the overall progress).

I'd also want a larger amount retained until the job was substantially complete. 10% of the total would be much better for me.

The homeowner and contractor have to feel comfortable to work with each other during a project that can be very taxing on everyone. If you're not comfortable with something up front, it'll only get worse along the way. If they aren't interested in negotiating, it's a free country...find another.


02-23-2010, 01:58 PM
Thanks guys. Not easy to find professional people.

02-23-2010, 04:25 PM
Ive done plenty of remoldeling projects I never needed a GC..I just call them to get the names of the good subs when I need someone.

Obviously if all her bids were that high there must be more involved on this job then was listed..

02-23-2010, 07:50 PM
I live in Mass. I deal with much smaller amounts of money. My rule of thumb is not to pay too far ahead. It seams to me you will be giving im $20,000 as of the start day. FOR WHAT??? I can understand if he was going to get some material but he just walks in the door and wants $20,000? No way. I don't blame him for wanting his money up front, but he must be reasonable. If you explain to him that you also want tobe reasonable, maybe you can work something out with him. Just tell him you don't want to pay too far ahead.

02-23-2010, 09:23 PM
I really am surprised by some of the responses here. Just an FYI, I am in NY, close to the OP, and my typical projects are just about exactly what has been outlined above. I build kitchens and baths, start to finish.

In the past, I've rarely taken a deposit to hold the customer on the schedule. I mostly work word of mouth, so I already have *some* mutual trust between myself and the homeowner. I do expect a decent chunk of change at the project start however. I am not a bank, I have no desire to finance someone elses building project. I have to give a deposit to the electrician for him to get supplies and cover his overhead, same goes for the plumber. There's more to a tub and sink installation than the owner supplied tub and sink...

I have to buy framing lumber, insulation, sheetrock, hardware, a dumpster, in the OP's case there's also windows and doors. I need money to cover all that. I also need money to cover my overhead. *I* dont pay my overhead, the customer does. It's business. Ever order cabinets from one of the big box stores? They want 100% up front and then make you 8 weeks before they send you a messed up order.

I dont agree with the $26K payment required by one contractor, but the $15K starting payment required by the first guy doesnt sound so ridiculous. Everything costs more in NY, and Westchester (where the OP is) is one of the most expensive places to live in the country. $45K for labor and building materials for a kitchen, bath and Dining room is not a bad deal. I have just a kitchen going right now that is costing the same.

The Kid
02-23-2010, 09:41 PM
What alex said. I require money for ALL materials up front. Every screw, tube of caulk, cabinet, etc.. Contractors who dont, end up not having what they need when they need it, ultimatly causing delays. I also ask for a portion of labor up front to get things going and to make sure my guys are paid when they need to be. (subs usually 50% down, remainder on completion)

As Alex said, we are not banks. We provide a service at the rate in which we belive it takes in order to run "our" particualr buisness. Remember, no two buisnesses are the same.

My requests for money upfront have been anywhere from 5k-30k depending on scope of project.

Boilermaker 98
02-23-2010, 09:55 PM
I have to weigh in on this one. I have been in the commercial/industrial HVAC and Piping business for 15 + years as a Project Manager and Estimator on projects from $5k to $10 million. Only on one occasion have I been able to get money up front for work. The owner offered, I accepted. All other times we usually have to wait 30 days to be paid after invoicing the GC/Owner. Many times we are waiting 60 + days to be paid. Largest outstanding invoice I have ever had was for over $1.5 million and it took over 60 days to get paid due to the timing of beginning of work, expenditures and being paid. Granted these are large numbers and many smaller contractors could never carry these amounts, but a successful, well managed small contractor should be able to carry 25-35% of all of the projects in progress costs.

I am also in the process of building a new home and am acting as my own GC. All of my subs are issued a subcontract with payment terms. Payment terms are invoice by the 25th and paid by the following 10th with 5% retainage (that is new state law in Illinois). I have not had one sub take issue with the payment terms.

If the subcontractors/contractors bidding the project want money for labor or overhead or minor materials upfront, they are not working for me because they do not have the financial wherewithal or financial management ability to be in the construction business in my opinion.

On my house I happen to be furnishing the majority of the materials (lumber, doors, windows, cabinets etc). I have no issue in putting a deposit down for special order items.

On another note, it is an accounting issue as well, it is called earned value. Overhead and Profit can not be recognized until work is completed and billed. Therefore overhead and profit is not "earned" until work is in place. I personally won't pay a deposit to hold a position in a schedule especially if I signed a contract for the work. There has to be a level of trust with clients/contractors.

Just my .02 cents.

02-23-2010, 10:08 PM
Brian, apples & oranges

Commercial - your expected to be part banker
Residential - no way - not in these times - it used to be but I don't do it any longer.

02-23-2010, 10:25 PM

$45K for labor and building materials for a kitchen, bath and Dining room is not a bad deal. I have just a kitchen going right now that is costing the same.

I was under the impression she was paying for everything material related after re-reading I see that may not be the case.

02-23-2010, 11:37 PM
Overhead and Profit can not be recognized until work is completed and billed. Therefore overhead and profit is not "earned" until work is in place. I personally won't pay a deposit to hold a position in a schedule especially if I signed a contract for the work. There has to be a level of trust with clients/contractors.

Brian, just like Tim said... apples and oranges.... I understand that commercial doesnt work the same. Did it myself. Steamfitter in NYC....

As far as the quote above... I dont buy it. I did a major remodel on a house here, and spent close to 4 months on the project. Why am I not allowed to bill for 4 months worth of overhead until the end? We're talking shop rent, heat, electric, licensing, trucks, insurance (truck, business liability, shop and tools), marketing, tools, etc.

Personally, I like my financial management strategy over yours... I work on people's homes with their own money, not mine. Unless you were keeping me busy all year, every year, I would never agree to an invoice on the 25th, paid by the 10th contract. Either you found sub's who are really hungry for work, or in my opinion, they're foolish.

I hear people say all the time that if you can't float a customers project, you dont belong in business. I'd like someone to give me a real explanation why that is.

A deposit to hold a place in a schedule is to protect the contractor. Do you think we never get screwed by homeowners? A last minute cancellation would cost me a lot of money. Go visit any "trades only" construction forum and you'll hear plenty of stories about shameless homeowners taking advantage, and flat out screwing their contractor.

The Kid
02-24-2010, 02:58 AM
Brian, just got home and read your post, laughed alittle bit. I will coment alitte better when Im alittle more clear headed.

:fish2:You do have a very valid point and though I have never been in "your" line of work, the subject matter here is residential with the builders/contractors making there own terms, not a multi-million dollar a year gc.

Brian in San Diego
02-24-2010, 07:08 AM
Do any other states outside of California have down payments delineated by the Contractor's License Board? In California you can only ask for and accept a down payment of 10% of the job or $1000, whichever is less. I guess if a contractor here was demanding such high "start" down payments then they would be setting themselves up for potential prosecution...but I'm sure the law is broken on a daily basis. I've done plenty of A/C "side jobs" over the years and have never asked for a down payment. I understand it's not the same because my jobs are over in less than a week. But it could be argued that you ask for a deposit for scheduling and a deposit on all materials ordered and final payment for all materials delivered to the job. I imagine that somewhere there is a delicate "balance" of what is best for both parties. I sure would be uncomfortable paying for 1/2 a job before any work was even commenced. Maybe an escrow account could be established so that the contractor knows the money is "there" but has to meet certain clearly defined and agreed upon "milestones" before drawing from the escrow account. One thing I do believe is that materials should not necessarily be paid for "up front". Most contractors should have 30 day terms with their suppliers and if they don't it seems like they may be a little shaky financially. Order the material, deliver to the job and get paid for it. That should happen before you are even billed for it.


02-24-2010, 07:12 AM
There's no way I would do work for someone on my own dime and then trust that I would be paid the following month. It's not about the contractor's "wherewithal", it's about cash flow and money management.

02-24-2010, 07:46 AM
Thank you guys for the answers.

02-24-2010, 07:56 AM
Brian (in San Diego)-

I've heard about that Cali rule, but does it apply to money exchanged when job commences, or just when contract is signed? (which could be months earlier)

As I said earlier, I rarely take a deposit to hold a schedule, but I do expect a check on day 1 of the project. Since Im showing up with materials, you could say Im floating them already (and until that check clears), so my ability to fund my business shouldnt be an issue in their eyes. I still think it's better busines sense to fund their project with their own money as soon as possible.

I might have to start taking deposits from now on.... :stirpot:

02-24-2010, 08:16 AM
Bill by the 25th, paid by the 10th.....
Any contractor/subcontractor worth his salt who knows business would laugh at those terms.

Boilermaker 98
02-24-2010, 08:57 PM

Getting paid in 15 days on new construction residential is excellent terms. Not one of my subcontractors has complained. Keep in mind, money is coming from a bank through the title company. I really understand what is like to wait on money. But 15 days with a written contract and a bank/title company disbursing funds is pretty good bet you'll get paid.


It is about wherewithal. If a contractor is not sound enough to carry payroll for 20 to 30 days, then to me he lacks the financial strength to run a sound business and be able to buy materials, pay labor, equipment bills or whatever. I don't want a contractor who works "paycheck to paycheck" so to speak. To flighty to me as a purchaser/provider of construction services.

I personally deal the old school way, do what you say you're going to do, when you said with quality I will go out of my way to pay you early. BTW not one sub has had to wait past the 3rd of the month yet for their draw.

Shawn Prentice
02-24-2010, 09:15 PM
It is about wherewithal. If a contractor is not sound enough to carry payroll for 20 to 30 days, then to me he lacks the financial strength to run a sound business and be able to buy materials, pay labor, equipment bills or whatever. I don't want a contractor who works "paycheck to paycheck" so to speak. To flighty to me as a purchaser/provider of construction services.

Completely agree. You don't have to finance the job, but you need to have money in the bank to operate, regardless.

Brian in San Diego
02-24-2010, 10:03 PM
I've heard about that Cali rule, but does it apply to money exchanged when job commences, or just when contract is signed? (which could be months earlier)

I believe it refers to payment before the work commences. Interestingly enough, the CLSB recently performed a "sting" and served a number of contractor's with NTAs (Notice to Appear). Among the complaints...soliciting an excessive down payment. The story is here (

Here's some advice they offer consumers.

Don't pay more than 10% down or $1,000, whichever is less.
Don't pay in cash, and don't let the payments get ahead of the work.