money paid in a contract?

[JJWalecka]

Is there a Law that governs the percent of money paid in a contract? For instance..
1/3 up front
1/3 after rough
1/3 after final

Some one told me that you create your own stipulations in your contract. My issue is that 1/3 would not be short $200.00 for materials, never mind paying my crew.

The best thing is He will not sign contract till permit is in hand. Before even starting the job I am out ninety bucks!

Any thought would be appreciated

 

[romexking]

Different areas have different laws concerning DEPOSITS, but I don't think for the payment terms.

Let me ask you...who is running your company, you or your customer? You make the payment terms, not them. I most certainly would not get a permit without a signed contract. The point of the contract is to stipulate the terms of a project. Until both parties sign (or come to a mutual agreement verbally), you don't have a contract, and therefore not a project to start. Why would anyone expect you to get a permit for a job that you have not been formally awarded.

You have already started out on an advesarial footing, I don't expect that things will get better. My suggestion is to skip this customer. My spider senses are tingling...I sense a sneaky SOB looking for someone to cheat.

 

[benaround]

JJWalecka,

You can make your contract up any way 'you' want. Most contracts favor the party that writes it.

Cash flow (positive) is a problem until you have enough to be the bank. Be

the bank for your 'excellent" customers and bbe a little tuffer oon the slow pays or price beaters

IMO, after rough inspection you should get enough $$$$ for all that is into it
so far,plus a little more.

This way you don't mind waiting for 10 finals to start, because you are ahead of the game.

 

[celtic]

You can make your contract up any way 'you' want. Most contracts favor the party that writes it.

I revamped my contract with info I "obtained" from other guy's contracts...mine is about 5 pages long w/o much mention of the actual project...the last GC I gave it to said " I've never seen a contract like this!" I don't know if that's a good thing or a bad thing...but I do know I can come out smelling like roses in vitrtually any situation

My schedule for payment is as follows:
50% at signing
25% BEFORE I even call for rough inspection
15% BEFORE trim out begins
10% AFTER passing final

Yes, it is a hefty amount I want upfront...and why shouldn't it be? I am electrician, not a bank. I am out there working not because I am rich and seek the glory of getting my hands dirty.

In NJ, you CANNOT get a final payment until you pass the final inspection...although the State does NOT tell you how much/what percentage that final payment will be. 10% is a small amount...I may even change it to 5%.

 

[hardworkingstiff]

I revamped my contract with info I "obtained" from other guy's contracts...mine is about 5 pages long w/o much mention of the actual project...the last GC I gave it to said " I've never seen a contract like this!" I don't know if that's a good thing or a bad thing...

My guess it was not good.

You must be doing a great job for your customers.

When (not if, the cycle always comes) things get tight (as far as the amount of work available) you might find it harder to get your terms.

 

[iwire]

I My schedule for payment is as follows:
50% at signing
25% BEFORE I even call for rough inspection
15% BEFORE trim out begins
10% AFTER passing final

If that is working for you great and I certainly realize it is up to you.:smile:

However as a consumer I would never agree to 50% before you do a thing.

I canceled one of my ISP accounts as they decided they where going to charge for the next month not the past month.

IMO 10%, 20% maybe if you had references that you provided would be appropriate.

I am electrician, not a bank.

Your not a bank but you are a business.

Do you pay for all your stock at the time of purchase?

Is the supply house a bank?

To each their own and as I said if its working for you that is great. I just feel like you may be turning away customers that will pay the bill but are not pushovers.

 

[JohnE]

In MA, you can not charge more than 1/3 of the contract price for a deposit. But you can also charge an additional 1/3 upon delivery of materials. So by the day you start, you can be up 2/3.

 

[JJWalecka]

Thank you for your time everyone.


J_erickson,

"In MA, you can not charge more than 1/3 of the contract price for a deposit. But you can also charge an additional 1/3 upon delivery of materials. So by the day you start, you can be up 2/3."

Do you know where this is stated in the Law?

The customer mentioned Trust was a stipulation!!

I had an oral agreement with the customer that I would pull the permit (with my money). We would meet Friday evening, permit receipt and contract in exchange for check. I waited for an hour for him to show up. He never came!

It is my understanding that he can not have another electrician working on the job. Worse case scenario, Can I cancel the permit?

Thanks again

The Fool
Justin J. Walecka

 

[JohnE]

I don't know where it is stated. I will look.

He can have another electrician in my opinion. You might have trouble getting your money back from the town. There is a procedure, I'm sure, but it often is a huge PIA. In one town I mistakenly put the wrong street number on the application. The next day I tried to change it and they wouldn't let me. The procedure to do so would have cost me more time than it was worth for $60.00.

Either way, I'd walk away from this customer.

 

[growler]

Is this customer an individual ( home or business owner ) or a contractor?

 

[ceknight]

However as a consumer I would never agree to 50% before you do a thing.

Yeah, what he said.

I won't cast aspersions on those who charge hefty up-front fees, they have their own business model and historical data to adhere to. But to me, if a contractor asks for 50% up front, I perceive that contractor to either be a fly-by-nighter or someone who doesn't have enough business credit to be operating comfortably, and hiring either of those is a risk. I know that's not always true, and in your case Celtic I'm sure it's not true, but that's the general perception I bring to the table.

It's not that I expect contractors to be banks -- it's that I expect them to be on net-30 day terms with their supply houses. If I pay a contractor up front, I'm being the banker, because the contractor sure as heck didn't get the supply house invoice before starting my job. So s/he's holding my money, and all the risk is mine because s/he hasn't started working yet.

Once some work has been performed, I have no problem opening up the wallet, but anyone asking me for half of the job cost up front is going to be sent packing.

 

[dcooper]

Re: what town?

Re: what town?

Yo JJ,
I am from MA.....What city or town. If you wrote on your permitt 'kitchen remodel' then he can't hire another electrician to work on the kitchen. I have had inspectors call me and tellme someone else is trying open a permit on a job I hold one on, and they won't issue.
You must get a signature on a contract......With that signature you can put a contractors lein on a property, take someone to small claims court, and there are a few other things you can do.
Get a credit card machine! For new costomers I don't know I ask them for a credit card #, I don't charge the card but I run a check on the avalibility on the card...If the job is $2000 then I make sure there atleast $1000 on the card. And I still get a deposit!
It is a business. There always has to be some sort of trust and honesty between a business and consumer.
If you have a bad feeling about someone or a job...DON'T TAKE THE JOB. Trust your feeling

 

[LarryFine]

Trust your feeling

Yes, Yoda.

 

[JohnE]

Yo JJ,
I am from MA.....What city or town. If you wrote on your permitt 'kitchen remodel' then he can't hire another electrician to work on the kitchen. I have had inspectors call me and tellme someone else is trying open a permit on a job I hold one on, and they won't issue.

That's not always true. I would issue one to a second electrician. I personally would contact the first to discuss it, though.

I recently finished a job that another electrician bailed on. This guy would not return calls and would not go back to complete. I talked to inspector and pulled permit to finish incomplete work. The inspector never contacted the first electrician. There is a lot more to the story, but that's the gist of it.

 

[JJWalecka]

Growler

"Is this customer an individual ( home or business owner ) or a contractor?"

He is the President of a Real Estate company that builds homes. He owns this property.

Dcooper

"I am from MA.....What city or town. If you wrote on your permitt 'kitchen remodel' then he can't hire another electrician to work on the kitchen."

New Bedford, Ma. The permit was for Rough wiring of apartment.


Justin J. Walecka

 

[growler]

It is my understanding that he can not have another electrician working on the job. Worse case scenario, Can I cancel the permit?

I wouldn't cancel. I would call him and ask what's the deal. If he has found another electrician I would get paid for my time & permit fee before the permit is canceled. If he has another electrician start work on my permit then I would report him.

Before doing anything always check out the situation. This could all be a mistake. There could be a good reason why he didn't show up. Some sort of emergency ( yes, he should have called ).

 

[celtic]

My guess it was not good.

Good for me....bad for the GC
I have the job secured.

You must be doing a great job for your customers.

Everybody gets the same job...some can afford my terms, some cannot.

When (not if, the cycle always comes) things get tight (as far as the amount of work available) you might find it harder to get your terms.

I'll get them one way or another ....the last thing I want to do when times are slow is to over extend MYSELF in the hopes that a GC/HO is not experiencing a cash flow issue.

 

[celtic]

However as a consumer I would never agree to 50% before you do a thing.

I can be "flexible" ....to some degree.
I'll accept 25% at signing and another 25% once the ball gets rolling.

Your not a bank but you are a business.
Do you pay for all your stock at the time of purchase?
Is the supply house a bank?

The supply house will charge a fee if the bill isn't paid within 30 days...should I pass that amount onto the customer?

I just feel like you may be turning away customers that will pay the bill but are not pushovers.

That's entirely possible....and I am sure it has happened ~ last years "add-a-level" job comes to mind...I did NOT get that job, BUT the HO was quite PO'ed with the EC they used as their final number was well above mine - my number was "all inclusive".

 

[hardworkingstiff]

I'll get them one way or another ....the last thing I want to do when times are slow is to over extend MYSELF in the hopes that a GC/HO is not experiencing a cash flow issue.

Excellent point.

 

[dduffee260]

We never get money up front on a project. I would NEVER give any reputable contractor any money up front for work being done for me. Do you pay your employees before they go to work? I know how it is to get burned.

All of our projects have a Schedule of Values. We have to perform work, or have materials for that project on site or in a bonded warehouse before any money can be paid. There is also retainage taken out on any sizable project for us.

If after we perform work, we do not get paid in a reasonable amount of time. We file liens or at least a letter if intent.

I hear contractors all the time with the " We are not a bank " quote. Basically it is the supply house that is the bank. Sure we have labor also, but we watch our projects carefully.

Personally I prefer to work for larger GC's. They are not crooks like most people complain about. The paperwork is usually flawless. You always know where you stand with a larger GC. It is the smaller GC's that are always apprearing to run a chinese fire grill project. These GC's are usually arrogant and think the rules should be bent for them but want you to adhere when it is more trouble for you. The larger GC's basically have so much work they want everyone happy when the project ends.