Contractors requiring deposits

[tonycarguy]

When you hire a contractor to work on your house, when is it reasonable for them to require a deposit before starting the work? What types of work typically require a deposit?

If they don't require one, is it safe to assume you can cancel the job before they begin (without causing undo hardship to them)?

 

[demarpaint]

What is the job, and the approximate cost of the materials? How much notice do you plan on giving if you decide on canceling the project? Also check state laws, they might require a contractor to set up an escrow account with you before collecting a deposit. That in effect protects both you and the contractor in the event he should decide to disappear with your deposit, or you claim to have funds you don't.

 

[Shannow]

If they offer to do work, for a price, and you agree to the price, then you are in contract...either party can then seek to be compensated (or to force the job through for payment), whether a deposit has been placed or not.

Your contract MAY include exit clauses for one or the other of you, but as they are agreed up front (before being in Contract), then they form part of the Contract in the first place.

 

[JHZR2]

Ive typically been asked for 1/3 up front for smaller guys, more if there are lots of materials. Bigger "small" business, often will do it on risk for us, but that isnt expected, rather I guess more a function of having a good relationship.

 

[mpvue]

gutter guys wanted 1/2, roof guys didn't require anything down.

if I was putting a deposit on the job, I would also want in writing when the job will be completed.

 

[rjundi]

Originally Posted By: tonycarguy
When you hire a contractor to work on your house, when is it reasonable for them to require a deposit before starting the work? What types of work typically require a deposit?

If they don't require one, is it safe to assume you can cancel the job before they begin (without causing undo hardship to them)?



Not at all unless materials are involved. For labor no way.

Typically this is a sign that company/contractor has really poor finances and is using the next job to fund themselves. The unfortunate thing is eventually the game is up and they go belly up. And your money disappears.

If they insist use an outfit that accepts credit cards as you can recover that money.

I have found most guys do not balk too bad about not getting their money up front when you state your conditions.

Been burned although small job.

 

[edwardh1]

my roofer asked for no deposit.

a friends 'add 2 rooms and a bath and deck' contractor put the roof on, asked for a big advance to cover plumbing electrical doors and windows and left town with the money

 

[Astro14]

Originally Posted By: rjundi
Originally Posted By: tonycarguy
When you hire a contractor to work on your house, when is it reasonable for them to require a deposit before starting the work? What types of work typically require a deposit?

If they don't require one, is it safe to assume you can cancel the job before they begin (without causing undo hardship to them)?



Not at all unless materials are involved. For labor no way.

Typically this is a sign that company/contractor has really poor finances and is using the next job to fund themselves. The unfortunate thing is eventually the game is up and they go belly up. And your money disappears.

If they insist use an outfit that accepts credit cards as you can recover that money.

I have found most guys do not balk too bad about not getting their money up front when you state your conditions.

Been burned although small job.


this - if expensive and/or custom materials have to be ordered, then a deposit for those materials is reasonable.

Otherwise - no.

examples: electrical contractor, standard lights, panel upgrades - no.

Tile installer, custom tile, ordered 4 weeks in advance of job - yes.

Roofer - standard shingles - no.

big example: building a house, ordered $50K worth of framing materials - I wrote the check (bank draw) for that in advance of the work, after the order was placed at the lumber company. Nearly everything else was paid after the work was done...

 

[Rock_Hudstone]

Personally, I never like the idea of forking over money upfront, especially to home improvement contractors who always top of the list of consumer complaints.

What other service demands money up front? Do you go into a restaurant and put down a deposit when ordering a meal, how about a doctor or auto repairs? As mentioned, unless there are special order materials needed, its just another way to get ripped off in my opinion.

 

[fdcg27]

An option I have used is to pay for materials personally, and pay the contractor upon completion for labor and any incidentals.
If a contractor won't agree to this, then I won't use them.
Too many people have gotten burned on upfront deposits.
Also, I have no interest in financing someone's business with my money, which is what you are doing when you agree to a deposit.

 

[eljefino]

I had granite counters put in, I had to pay 100% of materials and 50% of labor upfront, it all worked out. They have to custom measure the unfinished kitchen then go back and cut stone to size, so I guess it's fair.

The contractor can put a lien on your house if you cheat him, if he cheats you, not much you can do.

 

[Quest]

timing is everything, and also depends on who you are dealing with.

larger-scale operations (well-established roofers with registered biz license and a proper office (not just a mailbox)), usually gives you a clear contract outlining the deposits and the final bills to pay.

That I typically go along with their contract.

fly-by-nite cash guy: I make the arrangment of 1/3 up front for materials (must see materials arrived at my doorstep before I fork out my cheque to him. Then the remaining balance when the job is complete.

Others such as major landscaping or major house work: I do it on a timeline basis: 1/3 for materials to begin with the job; 1/3 when the contractor reached the agreed state of work; then the final 1/3 when the job is complete.

Have to be careful about some shady/questionable contractors for they will pull you with a lien on your house if they "play" you along.

Q.

 

[Spector]

I never pay a deposit prior to work being done. BBB also frowns on any contractor requiring a deposit

Means they are undercapitalized and could go south at any moment or just starting up with little experience as a business etc.

 

[Boatowner]

I will not pay a deposit on a contract. It is a deal killer with me. A licensed contractor can place a lien on your property if you don't pay. In every state you can check online to see if a contractor is licensed. Also, any contractor should be able to provide references.

 

[Stelth]

In California, there are specific laws regarding deposits. You can research this at the California Contractors State License Board website.

Having said that, I recently had a roof put on my house. I used a small contractor who wanted me to buy the roofing, and then pay the labor when the job was complete. I went with him to the roofing supply. He ordered, I paid. It worked out pretty well, and my roof has withstood some recent high winds.

There's more than one legitimate way to finance a construction project, depending on how labor- or material-intensive the job is, how big the project is, etc. It can be simple or very complicated, i.e., cash vs. fund control etc.

Never use a contractor you don't trust, regardless of how many papers you sign or how many legal protections you have. Only heartache lies down that road. Even projects with trustworthy contractors can become difficult.

 

[azjake]

Make sure they're licensed, bonded, and insured and current on all three. If expensive materials are required to start the job maybe a deposit to cover some of it is ok. However if they need all the money for materials and/or some for labor walk away. This tells me they're cash strapped and could be close to going under.

 

[Win]

I handle these requests on a case by case basis.

Generally, I won't give an up front payment for materials to the tradeperson, unless i already have a working relationship with them.

If materials are required and the tradeperson lacks means to front them, then I make my own arrangements with suppliers to deliver the materials to my work site and to bill me direct. Often, for special order or custom made goods, the suppliers will require a deposit, but you've got a lot better chance of getting your money back from them, then the guys that have a van, a ladder, some hammers, and not much else.

I always get a list of suppliers and laborers and get lien waivers in hand before I pay anything. I learned the hard way about paying for things multiple times to get rid of liens. I wish they had taught me about that in law school. Maybe they teach that in business school.

 

[tonycarguy]

Thanks for the replies. This question has lingered on my mind for a while now.

Last year I had a guy install a steel garage door. He did not require a deposit. A week before he was to start the job, I wanted to cancel but he said the door had been cut and its windows installed already, so if he canceled it, he would be charged $250 by his supplier. I don't know if he was [censored]'ing me to make me feel guilty about canceling. In the end I let him do the job. But it made me wonder, was his story legit? If I *DID* cancel, what would he have done?

 

[zzyzzx]

Never give anyone a deposit for labor or off the shelf parts. For custom parts, yes, but you can always get those yourself.

 

[JHZR2]

Originally Posted By: Win
I always get a list of suppliers and laborers and get lien waivers in hand before I pay anything. I learned the hard way about paying for things multiple times to get rid of liens. I wish they had taught me about that in law school. Maybe they teach that in business school.



Are you saying they put a lien against your property even after you had paid in full???!?