Typically as GC/contractor we asking 10-15% on bigger project if total amount over $25K +. or 1/3 -1/2 of total amount on smaller scale project, under $10K.
And we collect a down payment ONLY after first day of work not at day of signing a contract. For special order material we are asking for prepayment.
Most jobs I do 30% upfront. If the job requires a lot of custom material or appliances that the homeowner wants me to provide I will exceed the 30% due upfront. Never had an issue
yes as a contractor and homeowner it is easier for both parties to do this. An alterative is to predate several checks in agreed amounts .The reason for 50 percent upfront today is unlike the old days suppliers are not generally willing to front materials so as needed they need to be paid for. As a contractor I do not wish to be the bank and have to worry if I am getting paid it puts undo stress on us and keeps are focus elsewhere.
Avalon typically ask for 1/3 down as a deposit when we sign the contract, 1/3 is due when we delivery materials, and the last 1/3 is due at completion and satisfaction of the project.
according to cslb laws deposit should be no more then a $1000 or 10% if contract amount is below $10,000.
payment schedule should be balanced for small payment as you go into the project.
dont ever pay 50% up front. this very suspicious
do not pay 50% up front !
by CSLB you should pay down payment $1000 or 10% from total contract cost which ever is less
10 percent or 1000 dollars. Whatever is less.
Here in Ohio, there is usually a payment or draw type system where at each phase there is an agreed amount due. If it is a bank loan it will coincide with that as well and both contractor and homeowner needs to sign off in order to get the funds released.
My Dad was a commercial and residential construction GC and president of the Florida construction industry licensing board for years. He spent many days in court with home owners and contractors and advised me never to pay a contractor up front. Construction project insurance requirements are that the contractor must qualify for a construction loan and reimbursement from the customer is ensured by the contract at the end of each phase of the job. You donāt start phase 2 before being paid for phase 1. This protects both the customer and the contractor. In addition contractors are protected by FL law and can place a mechanicās lien on any property when payment is not received for any portion of the job. Unlicensed contractors always ask for large deposits and are famous for failure to start the job and failure to complete the job. Large up front payment allows a contractor to delay completing the job and to walk away never starting the job. All contracts should have a start date and finished date with built in incentive for early completion and penalties for late completion. When subs attempt to start their own businesses they rarely understand how to write proper contracts, manage monies and labor and materials costs and often take huge deposits upfront putting the customer in a precarious position which is an unfair advantage. When hiring contractors for my projects he advised me to ensure that the materials were on the job site and accounted for. He said before you pay $10,000 draw make sure either
$10, 000 worth of material is on the job site and or $10,000 worth of work is completed before you pay.
All depends on what kind of trade you are doing, for example, we do Stone Countertops (slabs fabrication & installation) we always get 65% upfront from clients when we supply slabs,
Slabs are expensive more then 50% goes to suppliers, so if we supply material we must get 65% upfront, If not, then the California law apply, as 10% upfront to start fabricating a countertops. our trade is not like other trades that a project can take months, our trade only take the most 2 weeks to have a project done, Today a client sing up a proposal for $11,895 this for material quartz, fabrication and installation for her kitchen , she paid via credit card the amount of $7,631.75 and we will be installing in 9 days, She told me that Home depot wanted all the money upfront and was charging her like 35 % more for projectā¦ I always recommend customers to pay with Credit card to be safe, CC always will be on your side if something goes wrong and you get your money back. sure you need to prove it .
For questions like these, it is always best to check how the contract is worded. After all, the contract is the only thing that matters in the eyes of the court. If the contract clearly states the purpose of that deposit (which it should for one that large) than you can determine if it is necessary or not.
Of course you a lot has to do with what the 50% is in real money but the State of California recommends no down payment.
The best way to do is to tell us the whole story and not just the 50% as we donāt know what kind of project that is and how well you know your contractor.
However answer your question issue is no down payment but you can have the money in trust for your contractor to get paid in stages after inspections.
In my case, I also had to pay 1/3 of it
I have seen this in my experience.
Good Morning.
The deposit amount is contingent on the scope of work. In general, the contractor should not be expected to finance the project, the contractor is not a bank. If special order / long lead materials, or letās say it is a driveway paver project, it is perfectly reasonable to contribute a 50% deposit to order your material and go into permitting. You can request from your contractor a proof of material order, and proof of permit submittal.
With homeowners we require 1/3 of the contracted price. When we order our windows and doors, we cannot return them. So this shows that the homeowner is serious about the work, but also generally covers close to the cost of the product if the HO backs out.
It honestly depends on the contractor. most local laws donāt have clear regulations on the matter however: 50% is not uncommon for smaller projectsā¦
I think my only concern is his reasoning, if he canāt afford material then i would question how professional is he reallyā¦
Honestly, it sounds more like a scam, and I hope you listened to the advice of everyone who tells you about it. Quite often, after making an advance payment (especially such a significant amount), people become victims of a scam. This kind of side hustle is very common among scammers. You need to be as careful as possible to demand all kinds of documents confirming the official activities of legal entities. I think that you should find something more reliable, not to stay in trouble.