Hi Susan
I am in nyc.
The payment structure doesn't sound too bad.
Before you sign anything you need to see his insurance policy. One million dollars plus a two million aggregate.

The othe other thing you need to see is their department of consumer affairs license for Home improvement contractors.

Check all his papers before you sign not after. This way you are covered in the event of a mishap.

You need to make sure you are the "additionally insured"

I can understand the 10% deposit, but you shouldn't have to pay again until at least half (or at least 1/4th) of the work has been completed.

The company/contractor we went with didn't require any deposit. First installment wasn't paid until half of the work was complete. Final payment was paid when work was complete.

We recently had something very similar done to our house...had to put down nearly half near the beginning (after he'd done demolition but before he purchased materials), an equal amount 1/2 through, the balance on finishing (the last $5000.) I was uncomfortable with it but the contractor is a long-standing friend and I trusted him (and it worked out fine). This is his standard contract, and I wondered if folks said no a lot, and I wouldn't blame them...

Your contractor's just making sure you don't shop his price once he puts you on the schedule (that's the reason for the original 10%) and then that the materials are paid for before he begins the work. I do the same thing, as do most others I know. That's nothing out of the ordinary.

bump

bump

I don't necessarily agree. This is a very big job. That's a lot of your money to have before even beginning any work. If the contractor is solvent and honorable then it won't make any difference either way, but that isn't always the case is it? You have to protect yourself. I would suggest breaking it down into more payments. For example: 10% deposit, 10% after demo and foundation begins, 10% after foundation complete, 10% after framing complete, 10% after rough plumbing complete, etc. That way the contractor is paid as he goes along (he doesn't want to risk you not paying him either) but his payments reflect the work being completed. Ideally neither of you should be too far ahead of the other.

In any event be sure to check at least two things: 1) Check his BBB record. You can do it on line. 2) Check his State licensing board record. If your state requires licenses for contractors you should be able to check that on line too. When you check his BBB record you want to see how many complaints he's had, how were they resolved and how long he has been in business. The length of time in business is relevant because some disreputable contractors change their business names or even their own names to try to escape from a bad record. Do these things no matter how many people recommended this contractor to you. A few minutes of research can save you tens of thousands of dollars.

- Jim

Thanks for all your responses. When I began talking to this contractor a few months ago, I had checked with Consumer Affairs and the BBB and he has a clean complaint record and a valid license. The advice to ask about his insurance is a good idea. I had not thought too much about it, other than confirming with Consumer Affairs that he is, in fact, insured. I am going to take it a step further and ask him to see his policy so I know what amounts he's covered for. He does come highly recommended by a friend, but as Jim said, you still have to check everything. We are meeting with him next week and will discuss the payment schedule. We haven't signed anything yet, so everything is still negotiable. If anyone else has other comments or suggestions, please feel free to weigh in!

Hi. This type of arrangement seems somewhat in line with contracts I've had in the past. However, it sounds like you'll be giving him 43% upfront (10%, then almost immediately another 33% before labor begins). This sounds a little front-heavy to me, but not crazy. It is true that they will have many materials to purchase upfront. But personally, I think I would prefer to tweak the schedule a little, and also make sure there is a worthwhile amount at the very end, too, so that your punchlist gets completed in a timely fashion. Good luck, it sounds like this is a well-recommended contractor, so I'm sure it will go smoothly.

I am going to take it a step further and ask him to see his policy so I know what amounts he's covered for.

Just ask him to have his insurance agent send you a copy of his insurance certificate. This is not out of the ordinary. In fact, it should be done prior to ANY homeowner letting ANY tradesman get started on their house.