They have not spent any money for materails. They have 30 to 60 days to pay their supply house. At the end of the week I will pay them in full if their work is completed.
deposit on commercial jobs
- Thread starter Mike Lang
- Start date
- Status
They have not spent any money for materails. They have 30 to 60 days to pay their supply house. At the end of the week I will pay them in full if their work is completed.
N844AA
Member
- Location
- Los Angeles
You have been thoroughly exposed as a charlatan, your attempts to convince us otherwise have been laughably inept. I will no longer be responding to your comments.
Now I know that this stament is not true. On the rare occasion our company needs to file a lien the attourney has not had a problem doing so and collecting our money owed.
Lets keep the name calling and attacks on others character out of this.
I have only been pointing out that in some parts of the country things are done differently.
They still have their labor invested.
What do you have invested?
What happens if you get hit by a truck and killed before the end of the week?
Everything you mention in your posts implies you don't trust your subs yet you claim they're so trusworthy. If they're so trustworthy you shouldn't be offended if they ask for a down payment.
You can decline to give them one but you shouldn't be offended by it.
It's one thing to say this is the way it's done around here but entirely different to say you're offended if someone asks for a down payment.
Last edited:
This explains it all for me. You're an employee.
They still have their labor invested.
What do you have invested?
What happens if you get hit by a truck and killed before the end of the week?
Everything you mention in your posts implies you don't trust your subs yet you claim they're so trusworthy. If they're so trustworthy you shouldn't be offended if they ask for a down payment.
You can decline to give them one but you shouldn't be offended by it.
Again - thanks for the reply.
I just don't understand what the deposit covers. Does anyone have a hard time explaining tis to customers, or do just not quite get it?
You mentioned labor. Generally speaking payroll is a week behind. The work you do this week your boss pays you for next Friday. A residential job doesn't last more then a week, so let me desribe a likely senerio if I hired you to work for me personally.
You start on Monday work on the project till Thursday. Your boss ins't paying you for these hours worked until the following Friday. I give you a check on the Thurday when you are completed and it gets deposited on Friday. Your boss can sit on this moneyy for seven days untill he has to pay for the labor and 30 days untill he has to pay for the material.
I not trying to start an fight with anyone - just looking for some clarification.
Thanks
??? I said I was an employee during the day three pages ago. However I build a new home every two yearrs for myself as an investment. In that case I guess I am the owner.
- Location
- Simi Valley, CA
In your contract in CA;
The following statement in at least 12 point boldface type: THE DOWN PAYMENT MAY NOT EXCEED $1000 OR 10 PERCENT OF THE CONTRACT PRICE, WHICHEVER IS LESS.
The section of the contract reserved for the progress payments shall include the following statement in at least 12-point boldface type: The schedule of progress payments must specifically describe each phase of work, including the type and amount of work or services scheduled to be supplied in each phase, along with the amount of each proposed progress payment. IT IS AGAINST THE LAW FOR A CONTRACTOR TO COLLECT PAYMENT FOR WORK NOT YET COMPLETED, OR FOR MATERIALS NOT YET DELIVERED. HOWEVER, A CONTRACTOR MAY REQUIER A DOWNPAYMENT.
The following statement in at least 12 point boldface type: THE DOWN PAYMENT MAY NOT EXCEED $1000 OR 10 PERCENT OF THE CONTRACT PRICE, WHICHEVER IS LESS.
The section of the contract reserved for the progress payments shall include the following statement in at least 12-point boldface type: The schedule of progress payments must specifically describe each phase of work, including the type and amount of work or services scheduled to be supplied in each phase, along with the amount of each proposed progress payment. IT IS AGAINST THE LAW FOR A CONTRACTOR TO COLLECT PAYMENT FOR WORK NOT YET COMPLETED, OR FOR MATERIALS NOT YET DELIVERED. HOWEVER, A CONTRACTOR MAY REQUIER A DOWNPAYMENT.
Correct, different areas of the country have different ways they conduct business, and by understand their ways, will only allow you to learn the differences, but there is no need to condem anyone for the way they operate.
And I'm not offended by this either.
I can either except these terms or I can decline them.
I wouldn't get offended when you present these terms to me.
You on the other hand get offended when someone offers you their terms.
I've been asked for a deposit or a down payment at a lot of places of done business at.
Not once have I ever been offended by this.
This is their terms and I respect that.
If I don't want to accept these terms and do business with them I don't have to.
N844AA
Member
- Location
- Los Angeles
Just a couple of interesting notes:
1. There are a handful of contractors in California that have special bonds in place and permission by the CSLB to take deposits of any size.
2. This requirement is for Prime Home Improvement contracts only, not commercial contracts or contracts between a GC and a sub. I realize this discussion is indeed about prime home improvement contracts (or the lack of) but I thought I would just chime in with this since most GCs think this applies to subs. Also I'm aware that Shockin is not in California.
To clarify - I honestly have never had a sub ask for a deposit. So I would probably be offend if someone asked for one.
The reason I would be offened is that I don't believe on a residential project, the contractor is acutally having to cover any cost (or very very little) for the duration of the week long project. So if they don't need the deposit to cover costs what do they need the money for?
Wouldn't the sub asking the HO to sign a contract outlining payment upon completion be fair for both party's. This would guarentee that the sub wouldn't run off with the money, and also that the sub would be paid when completed.
Here in my state, we are licensed and bonded to protect the consumer, so asking for down payments is a common practice for all residential, and some commercial accounts, that can't pass the credit test.
Fair enough - it sounds like you manage your risk by requiring a deposit for customers that have a history of not paying i.e. bad credit. That is a perfectly good reason to ask for a deposit.
If you personally were lumped in with these deadbeats (assuming you have good credit) would you be offended?
this started out as deposit money on comercial projects. now it has gotten to business theory on deposit money in general. i can only speak for residential . i cant get a dime up front (wish i could). there are 8 builders in the united states with deliveries of over 20,000 units per year and sales of $10 billion or more. i know these guys dont pay a penny up front. and i am saddend to find that i am not a businessman because i dont use contracts. i cant believe i have been doing this wrong for all these years.
It would still be possible for a contractor to have a contract to keep the cash flowing, i.e.
Advance...$1k
Next Payment on delivery of materials...Materials plus a substantial markup
Next Payment...Partial Rough
Next payment...Rough
Payments of COs with deposit/advance & final, etc.
For shockin...The combination of no contract and no payment is asking for trouble IMHO. It would be just as easy to say "There's a lot of trust in my area so we pay for all work in advance. I'd be insulted if anyone asked me to work without paying for it in advance".
N844AA
Member
- Location
- Los Angeles
If doing business without contracts was so advantageous, all your Fortune 500 companies would be doing it. If you're doing T&M work you're only risking losing what you've done since the last time you've been paid, and there is a certain amount of risk in T&M work and we accept that.
But if you bid a job for $100,000 to wire a strip mall, and wired the property without a contract, I think most would agree that's a very poor business practice.
You may not believe it, but there are plenty of guys that rush into large number jobs without a contract, they usually leave behind a trail of unpaid credit bills to everyone, and end up in deep debt, when the GC or Owner says those famous words, "WE DON"T HAVE ANYTHING IN WRITING" It will be impossible to get any help from the legal system, without signed contracts. The best outcome is your family stays together and you start over.
- Location
- Windsor, CO NEC: 2017
- Occupation
- Service Manager
Wow, you need to call my supply house, they didn't get a copy of your rulebook.
Best case, if I pick up material on the 28th of the month, then I would have 43 days to pay for the material I picked up.
If I picked up material on the 25th of the month, then I would pay for the material in 15 days.
I will not play calendar games with a GC, if they want the work done they can get their own financing, I'm not a bank.
On another note, the lien game has one problem - if the EC doesn't file the lien before the new homeowner moves in, then the EC gets to wait until the next sale of the house to get the matter resolved by way of lien. The only thing a lien does is hold up sale of a house until the debt is settled.
- Status