Contractor Deposit

12 Replies

I had a recommended roof contractor lined up to do a full roof tear off and replacement for 6600.

We had hammered all the details out and he was supposed to start this thursday 11/20. However, they wanted 1/3 deposit upon contract signing.Which would be Monday or Tuesday most likely. He said that it's "company policy". I even agreed to give a 1000 deposit, upon signing and the remaining 1200 upon start, however, this didn't work out.

From what I've read most people on here only pay upon START, not upon contract signing correct?

I paid 1/3 upfront for my last roof replacement. It is standard. As a roofer, I would want the funds before starting as well (looking from the contractor's standpoint).

Perhaps you can agree to have a third party (such as escrow), take the full payment, and the contract would stipulate when and how much would be paid out to the contractor. This way, you are protected, and the roofer is comfortable knowing the entire amount is sitting in an account for him. Just a thought.

Nation-

You paid 1/3 upfront as in several days before start upon contract signing, or upfront as in when work started.

It just seemed odd to pay 1/3 when the contract was signed several days beforehand, the tear off involves little to no materials, just a dumpster rental.

If I recall correctly, it was approx. 3-5 days prior to first day of work.

I know there are a lot of crooks out there and you need to protect yourself, but you did say this roofer was recommended to you. Don't you trust the recommending party?

Here is another idea: Pay with a credit card for the initial and if the roofer does not start, you can call the cc co. show the contract violation and have the charge reversed. That is why they carry insurance.

They were recommended a person on a local REI board. Not anyone I know personally.

It just seemed odd 2200 upfront, even when I tried to meet him in the middle at 1000.

I understand. Not odd at all. Look at it from the roofer's perspective, there are many crooks and wanabie investors looking to take advantage of him as well.

I would use the third party idead for each of your protection and comfort levels just to be safe.

Nationwide -
I have not heard of that many contractors taking credit cards. Are there any other third party methods you can use?

I was happy to have a contract nailed out, I would feel weird emailing the contractor back trying to come to a mutual agreement, but I guess it would be beneficial for both of us.

The main problem here is getting the damn people out to even look at it. You hear all these people talking about contractors having no work.... I just dont see it.

Maybe you could add a few payment points so that he is less ahead of you in the beginning and not as behind at the end.

Is he licensed/insured and has references? If so your 2.2k is not worth his reputation and if he is dishonest he could take your 1k, start the job and probably still take advantage of you.

Some people do take advantage of contractors, he is probably thinking if its hard to get a deposit how hard will it be to finish and get paid at the end(with alot less leverage after the job is finished).

as far as getting the damn people out to even look at it and contractors needing work...I can't speak for other contractors but I have noticed an increase in the small misconception that contractors work for work over the last few years.

Myself, I work for money. I don't need work, I need money. If someone waves money in front of me I look like the dog in that old bacon bits commercial, and I will be at their beck and call :).

Dealing with contractors is always like dancing on glass!

1/3 is not that uncommon. They need security for the job as well.

My advice is to watch them very closely and put some incentive language in the contract.

If they get started and finish on time, there fee is solid. The later the job gets started and/or completed, the more money you will deduct from the final invoice.

Originally posted by Terry Royce:
It just seemed odd to pay 1/3 when the contract was signed several days beforehand, the tear off involves little to no materials, just a dumpster rental.


No...there are labor costs in the tearoff (most physically demanding part of the job) and the upfront costs of the ordered shingles that are delivered on-site at your property in addition to dumpster rental that is charged at a higher rate because the weight of shingles only allow 1/2 a dumpster to be filled and the costs of laying down the tar paper immediately after the tearoff is complete as you can not just leave sheathing exposed to the elements while you wait for the next check.

With 1/3 upfront, the truth is the contractor is out of pocket by day 2.

Again though.
I agreed to pay a 1000 deposit upon contract signing, and the remaining 1200 of the first 1/3 upon work being started.

I feel like I always read on here and other forums never to pay upfront, but this thread seems to completely contradict all of that???

Think of it this way:

There is a continuum in this negotiation. On one end, there are investors wanting to hold all the funds and even keep those funds working and making more money as long as they hold it. On the other end, the contractors would love to be paid 100% up front.

At either end, someone is taking all the risk with no reward up front and these are inherently win/lose scenarios.

So, contractors want to get something up front for their labor and materials. While a contractor should be able to afford the materials up front many haven't managed their cash reserves well enough.

The bottom line is that you both don't know each other and haven't had the relationship built to trust further.

Originally posted by Terry Royce:
I feel like I always read on here and other forums never to pay upfront, but this thread seems to completely contradict all of that???


I'm not saying do or don't pay up front. I'm just trying to get you to understand how much a roofer would truly be out of pocket at the outset of the project. Until you're a repeat client or a bonded contractor yourself and ESPECIALLY because you're an investor, something upfront is not uncommon.

Dan is able to negotiate terms with one of his contractors because he has a long term relationship with that contractor.....and that contractor knows where he lives.

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