Contractors don't require deposit

Speaking as a retired contractor I would bet good money that more homeowners have ripped offed contractors than the other way around. With todays overextended, want everything they see homeowners I do not know how contractors do it. I have have heard nightmare stories of homeowners refusing to pay painters because they did not like the color of paint they themselves chose. And several in which homeowners hire for work to be done without any intention of ever paying. So while there are bad contractors out there there are many more bad homeowners. If I were in business today I would not step on a job without at least a deposit for materials.

About ten years ago a Florida contractor took over $17,000 from my 91 year old Aunt as a deposit for new doors and windows. He took the money, took out her doors and never came back. The States Attorney says that was a "Civil" case.
The States Attorneys are so crooked they can sleep in a trombone. That's the problem.

As a constuction professional with, so far as I know, zero enemies, I enjoy Greg's pieces. One day, just for kicks, I would like to see letters from contractors/repairmen regarding their experiences with, what I call, toxic customers.

I am ashamed already, construction with an R.

Grandpa Jim wrote:

Speaking as a retired contractor I would bet good money that more homeowners have ripped offed contractors than the other way around. With todays overextended, want everything they see homeowners I do not know how contractors do it. I have have heard nightmare stories of homeowners refusing to pay painters because they did not like the color of paint they themselves chose. And several in which homeowners hire for work to be done without any intention of ever paying. So while there are bad contractors out there there are many more bad homeowners. If I were in business today I would not step on a job without at least a deposit for materials.

I am an electrical contractor in the orlando area and I completely agree. The contractor has a right to protect themselves from customers that refuse to pay. I wouldn't step one foot on a customer's property until I got a down payment to cover the cost of material. Also, I put in my contract that the customer must give 10% down and 60% when the rough in is finished. If they can't pay the 60% after rough in, I can bet I'm not going to get the rest. At that point, I pull all of my guys off the job until I get paid. This still doesn't help me recoup the money I lost paying my guys. For the record, any contractor that steals money from a customer disgusts me. All you have in this world as a contractor is your reputation.

Greg, keep up the awesome work! Consumers need your columns. Do you ever hear from contractors or repairmen who are being ripped off by clients? I know this is a consumer advocacy column, but I am curious about that.

Grandpa Jim wrote:

Speaking as a retired contractor I would bet good money that more homeowners have ripped offed contractors than the other way around. With todays overextended, want everything they see homeowners I do not know how contractors do it. I have have heard nightmare stories of homeowners refusing to pay painters because they did not like the color of paint they themselves chose. And several in which homeowners hire for work to be done without any intention of ever paying. So while there are bad contractors out there there are many more bad homeowners. If I were in business today I would not step on a job without at least a deposit for materials.

I understand what you are saying, but you must remember YOU have an option of placing a "construction lien" on a consumer's property until full payment has been made! That has been a part of every contract I have ever signed with a contractor. I am sorry, you should have enough liquidity to handle everything that pertains to your business, and allow me to pay you for your work at the end of the job. I have only done business with one contractor (my roofing contractor in order to purchase & deliver the materials, no labor was collected at all until the end of the job) out of many I have had work done on my home who require money up front! If I have to pay up front, I will get the supplies and do it myself, or otherwise it simply won't be done! I have learned that there is a lot of competition out there, and there is someone who will do the work, and expect payment afterwards (which is how it should be)! Then after the contractor has been paid, he/she needs to forward me a letter stating there is no lien placed on my property (whether they placed one or not)!

Victor wrote:

<quoted text>I am an electrical contractor in the orlando area and I completely agree. The contractor has a right to protect themselves from customers that refuse to pay. I wouldn't step one foot on a customer's property until I got a down payment to cover the cost of material. Also, I put in my contract that the customer must give 10% down and 60% when the rough in is finished. If they can't pay the 60% after rough in, I can bet I'm not going to get the rest. At that point, I pull all of my guys off the job until I get paid. This still doesn't help me recoup the money I lost paying my guys. For the record, any contractor that steals money from a customer disgusts me. All you have in this world as a contractor is your reputation.

Here again, I understand what you're saying, too. But do you excercise the option of the construction lien? I have no problem with paying for the cost of materials up front for large expensive jobs, but I will either go with you to get them or you will place the order in my presence and I will pay with my funds directly to the supplier! But for smaller jobs, you should have enough liquidity to handle those expenses, and expect payment at the end of the job. If you can't do that I view you as a business which is not very stable as it should be! If you are concerned about someone such as the "person who refuses to pay because they didn't like the color," you simply document at certain steps in the job allowing the customer to review what has been done so far and have them sign off on it! They don't pay, you place a lien on the property! Those are bad news for homeowners as courts will weigh heavily on those! Most folks do not want to lose their property, and my grandfather (who was a contractor) used the construction lien for every job, but only had to act on it on three occasions. In one of them, he ended up with a quarter of the home's value after the folks were foreclosed on, and the bank had to settle all the liens on the home including the one my grandfather had against it.

I would not hire a contractor who needed up front money. It is often a sign of little to no credit on their part. I built my house acting as my own general contractor. I used different subs in each phase. No contracts, all hand shakes. All were paid cash with each job divided in thirds and never any up front. I had one sub do the deal over the phone. He never asked for a penny until it was done. The next day after completion, I was taking the money to his office. To this day I have never seen him in person, but his work was done well and on time. Each of my framers guys were given a cash bonus by me jsut for the work they did. When I was done, my bank had me consult on two other jobs they had loans out on.

There is a simple solution. Use an agreed upon escrow account. No money can be disbursed without both signatures. Does not matter if it is a loan or cash, the account can be set up. And it is easier for contractors to gets liens than a home owner to have recourse.

FSU wrote:

And it is easier for contractors to gets liens than a home owner to have recourse.

H e l l yes, so true!!!

Worth a try, man.

STILL would like to know where we can sign up for "Beer for my horses" duty...

While you are correct. It can also be a sign that the contractor does not trust the homeowner.

FSU wrote:

I would not hire a contractor who needed up front money. It is often a sign of little to no credit on their part. I built my house acting as my own general contractor. I used different subs in each phase. No contracts, all hand shakes. All were paid cash with each job divided in thirds and never any up front. I had one sub do the deal over the phone. He never asked for a penny until it was done. The next day after completion, I was taking the money to his office. To this day I have never seen him in person, but his work was done well and on time. Each of my framers guys were given a cash bonus by me jsut for the work they did. When I was done, my bank had me consult on two other jobs they had loans out on.
There is a simple solution. Use an agreed upon escrow account. No money can be disbursed without both signatures. Does not matter if it is a loan or cash, the account can be set up. And it is easier for contractors to gets liens than a home owner to have recourse.

The idiocy of some homeowners is astounding. A weekend’s worth of HGTV viewing DOES NOT mean you know everything there is to know about roofing, framing, and plumbing.
For the brain trusts who think putting a lien on a home is easy and the answer to everything, you don’t know construction law. Try perfecting that lien and then collecting on that perfected lien. A lien just means my name is now mud in the neighborhood. My reputation is the ONLY thing I can sell jobs with. Do you think neighbors are going to take my word against their neighbor’s? People are quick to blame the contractor, but rarely do we get credit.
I had a homeowner who didn’t like the tub SHE selected after it was installed. It was going to be a costly change order. So she sabotaged the job by opening the windows and allowing rain into the jobsite.(Her teenager let that little information nugget slip.) That job went south and I'm out $18K. But because I've done 6 jobs in that neighborhood and am negotiating 2 more, I can't afford the bad publicity with legal wrangling, I just eat it.
And then there is the homeowner who is astounded when you turn down work because they scream and swear at your employees.
And then we have the know-it-alls who insist on pulling up a chair and "supervising" the plumber while he fixes the homeowner's "repairs" that have resulted in leaks.
Don’t forget the homeowner who can't make a decision to save his/her life and then badmouths you that the job is taking too long.
And change orders. Even the most minor changes that are months away from completion cost money. Sometimes a few phone calls, but other times it means major changes. Picking a different fixture in the half bath means it interferes with the medicine cabinet opening. So you need to select a different medicine cabinet. It also means the drain is different. What homeowners consider a minor change now means several hours of work on my part. I tell them this and they agree, but when I get the change order to them in a week for signature, they balk and act like I should work for free.
Then we have the homeowners in this column who refuse to give me a deposit. From the first time I've spoken with each customer, I'm spending money. My employees don't work for free. I pay them for their expertise and craftsmanship and their people skills to deal with difficult customers. It costs me money to come to your house and get measurements and do an estimate. A simple roof estimate is a minimum of 2.5 hours, while a remodel can be 15 hours, and I haven't made a penny and may not. During the estimating process I do some value engineering and explain the construction process. I also have a 20-year local reputation with hundreds of references. But you want me to finance your project. I try to negotiate, but if a customer is insistent on no deposit, then make absolutely certain you will pay for my financing. I'll charge you for the little flashing repair I would have done and not charged you for or the waterproofing in the shower pan I would have thrown in for free will now be charged, and at a premium. I'll put a 40% markup on things rather than my regular 30%, I'll find some way to make sure you pay for my good name. If you start off a business relationship thinking I'm a thief, then in my experience, nothing I do will ever result in you trusting me.
And finally we have the customers who think we can do things without a permit. If you want to do things without a permit, find your contractor in the parking lot of Home Depot. I am a state certified GC and roofer. I've spent years honing my skills. I am not going to risk my license because you want to save $200.
And to the hundreds of customers who have allowed me into their homes, offered me coffee when I arrive at 7am, have given my employees small gifts when they've done a little something extra, said thank you and refer me to their friends and family, thank you. You are what make this job so much fun.

I work for a pool company, we do new and renovations and it nevers fails they dispute the final 5 or 10% due after we have exhausted all efforts to please them. A construction lien does not always work, most of the time you can't do anything until they try to sell the house which could take years or you get stuck with attorneys fees. I agree completely with a fellow contractor, I have plenty of customers that think they know how to build a pool, if you do then why hire us? or they wait weeks on end to give me tile, interior, and deck color selections, then complain about the timeline. Not all contractors are crooked nor are all homeowners, however a contractor has to be able to "pick" his customers and be satisfied with the outcome too. We take great pride in customer satisfaction, most times the deposit is to pull permits, not pay bills for other jobs, so Homeowners out there, ask questions, check references, check the BBB before you sign and maybe you won't get burned and the contractor won't get stuck!

Contractors all over the country are being taken advantage of by bad clients because the abuse has been going on for so long. NOT ANYMORE thanks to thecontractorsside.com . The little black book for the guys in the industry to know who the good guys are.

Keep in mind that the Better Business Bureau is NOT a government entity, but a private company which charges businesses who wish to be listed. Many small businesses, including mine, simply cannot afford the hefty fee, which seems almost like "protection money."

Greg how about a list of known con man, I mean contractors who have a habit of taking the consumers deposits with no intention of delivering, and or installing their product. I know of several you have told us about in your articles the past few month. How about the top ten biggest cons.

I just want to say that alot of small businesses have suffered in this economy and require a deposit just to survive,BUT that being said, to take 10,000 in good faith and NOT do the job? People like that destroy the faith in honest,good,fair,quality contractors that are just trying to feed thier familes..The time will come when they will have their day,..lol

I initially wrote my first comment based on the article, but after reading all the posts I have a few more things to lay out there,.. To "a fellow contractor"; Your absolutely right!I was a flooring contractor and it never ceased to amaze me how people tried so hard to undercut the job, often times sabotaging it financially,by purchasing inferior materials, hiring uninsured labor, or having you cut courners to save a few dollars.I've had to walk off jobs simply because I, in good concience, could not install for the best neg. price.You get what you pay for, so dont be insulted when the price is a bit high for a good,reputable expert.We not only have to put up with the problems of the job itself, but all the myriad little disturbances of the client as well.Its not easy to try to measure and line up when the client stands behind you and relates thier childhood,...AND did they think fridges and stoves, washers and dryers move themselves?this is time consuming and costly, if done correctly.(no washer in the wall!!)I wont even go into pets,..lol And if things could get no worse, the economy collapses resulting in small business like mine going under. Everyone looking for a deal, go back to earlier statement^." A fellow contractor" as well as " contractor's boat" said it best, check out the contractor first, get to know him/her and family if you need to.(I'm on a christmas card list with most of my clients).go see thier work whenever possible, and of course all web info you can get.(isn't technology swell?!?). Dont be a "sheeple".Otherwise you too will be lead astray and I cannot feel for you,..Contractors; If the job smells bad from the get go, dont take it! I know in these hard times and it's tough to walk away, but what is your integrity worth?( as a professional I'm used to over 8oo a week, now I'm an applicant for burger king, but at least I still have MY honor).Simply put, to both parties, BE SMART! Or be lambchops...

are from windermer