New GC for roof wants full payment upfront?

32 Replies

I need a new roof on my latest flip, NEW GC said he wants the full $6100 down because its not my primary residence. He won't sign the invoice until its paid in full (and I live across the state). I called one reference and he seems to check out. 

Stetchy? 

Hi @Drew Denham . There may be legitimate reasons for a contractor to need all funds upfront, but I've yet to hear one. Certainly, "because its not my primary residence" is not one of them. Why on earth would that matter?

Yes, contractors have hard costs for materials. I'd be willing to pay for that. But a huge chunk of that estimate is labor, and there's no way I'd pay that in advance. BTW, his invoice did breakdown labor vs materials, right?

Lastly, one reference means nothing. Find out who the active rehabbers in your area use for roofing. I'm betting it's not this guy!

offer to buy the material only. Anything more than that is unacceptable.

And when I say buy material, means you pay the store for the material, not give the contractor money.

I wouldn't make that payment.  Even if he is honest, what is the incentive to finish on time?  If you really want to use him.  Pay for the materials directly and then for the difference when completed.  Or use a credit card with a set completion date.  

Did you get multiple quotes?  I just had a roof done in another state. Got 3 written bids. 2 contractors found via national web based service. Low bid $10k, high bid $17k.. Best quote came from a roofing contractor not a GC. None of the contractors called for full pymt up front. Paying a contractor in full up front should not be an option. 

Find another contractor. You could offer to just pay materials as well but I'd say at this point find someone else. Good luck!

Don't know about Michigan specifically but in Massachusetts that's illegal. I don't have my code book in front of me but I seem to remember it being illegal nationally. I could look it up but I just woke up!

Even though it's a personal home, my neighbor is going something like that right now. She is older and she had leak from the roof, she pulled money together to get it fixed. A Jack-of-All-Trades type of guy told her he could get it done and gave her the whole spiel to make her confident in him. She paid him in full and did not see or hear from him for more than 2 weeks, its not until she had her daughter and her son-in-law involved that he started bringing in equipment. The actual work did not begin until about 3 days ago. As Michael Jones said, most of the money is for the labor, the material is cheap, so why are you paying for labor that has not been done yet?

I would recommend never paying 100% upfront since you have no recourse or leverage in case things aren’t done as expected.

Although ideally you can control costs by paying materials directly, I’m not opposed to a small down payment (20-30%) for a larger job which translates to their materials and a setup usually. 

That said, in my experience, most  folks who are seasoned contractors don’t ask for prepaid payment in full. If they do, you bear 100% risk where it should be shared.

@Drew Denham That seems absurd. Here is Massachusetts I usually do half up front and half after job is done. I have also had a couple of roofers ask for all at completion of the job and nothing upfront.

Originally posted by @Drew Denham :

I need a new roof on my latest flip, NEW GC said he wants the full $6100 down because its not my primary residence. He won't sign the invoice until its paid in full (and I live across the state). I called one reference and he seems to check out. 

Stetchy? 

 No.   No.    No

Do not do it

PLENTY of selective scammers who are GREAT with the majority of customers and they use them for their rwferrances and outright steal from the other customers

I would Drop that contractor like a hot potato. 

I now only buy materials upfront and no pay upfront. 

Sounds like he is wanting the cash to finish his other job that he is behind on. I would suggest not hiring this guy or if you think he is the best you can get, pay for the materials and tell him you will pay within a day once the final project is completed. This will give him incentive to complete the project and receive the final payment and not have to wait. Don’t forget to check if he is license to install roofs. Best of luck.

I'm working on roof and siding repairs from hail back in May.  The roofing guy (doing windows and doors, too) doesn't want any payment until the job is complete.  Doors are done, I expect the roof this month, but the windows can't be done until spring.  No payment until after the windows are done.  I picked a stucco company over a slightly cheaper bid because the cheaper guy wanted a third up front and wouldn't budge.  The one I went with doesn't get paid until the project is complete.

Find a different roofer.

I think the underlying problem here is the roofer (notice i did not say roofing company), had a bad previous experience from a different client and is simply protecting his behind from being burnt again. Look, contractors have their own experience as much as investors do, respect their decision and simply move on. Just for reference, on a commercial scenario, a good company can do a turn-key 100k jobs with no problem, but the question is, how secured is the client, how long can we get our money back, and at what profit margin?

With contractors if you pay 100% upfront, what do you use as leverage if it is not done right?  

Most roofers do not last long in the business may be 7 years. I paid 1/3 upfront, 1/3 mid point and rest after completion.

I am a contractor for 37 years. If you are a flipper or another contractor and I have not done any business with you before, I have most of my money before my guys do any work. The rest as I am completing the job.

Most of my work is done with a deposit of $100 and balance upon completion. Home owners pay their bills. Flippers or contractors not so much. 

DO NOT MAKE THAT PAYMENT!!!!!!!!!

It is illegal in MA for a contractor to require more then 1/3 of the cost of the job upfront unless there are custom materials that total more than 1/3, then they can charge the amount of the custom materials. 

Check out line #6 ...

The following fourteen items must be included in any contract between a homeowner and a registered home improvement contractor for home improvement work. Homeowners and contractors with questions about required contract terms or the Home Improvement Contractor program, should contact the Office.

  1. The complete agreement between the contractor and the owner and a clear description of any other documents which are part of the agreement.
  2. The full names, federal I.D. number (if applicable), addresses (NOT P.O. Box numbers), of the parties, the contractors registration number, the name(s) of the salesperson(s) involved, if any and the date the contract was executed by the parties. The contractor's registration number must be on the first page of the contract.
  3. The start and completion dates of the project.
  4. A detailed description of the work to be done and the materials to be used.
  5. The total price of the work.
  6. The payment schedule, with the dates and the amount of each payment stated in dollars, including any finance charges. Any deposit required to be paid in advance of the start of the work cannot exceed one-third of the total contract price or the actual cost of any material or equipment of a special order or custom made nature, which must be ordered in advance of the start of the work to assure that the project will proceed on schedule. Final payment cannot be demanded until the contract is completed to the satisfaction of all parties.
  7. Signatures of all parties.
  8. A clear and conspicuous notice stating:
    • That all home improvement contractors and subcontractors shall be registered and that any inquiries about a contractor or subcontractor relating to a registration should be directed to the Office of Consumer Affairs and Business Regulation Home Improvement Contractor Program, with the Office's address and phone number.
    • A 3-day cancellation notice, informing you of your right to cancel your contract if you signed the agreement in your home, or at a place other than at the contractor's office or business;
    • All warranties on the owner's rights;
    • A statement warning, in ten point bold type or larger, directly above the space provided for the signature, the following: DO NOT SIGN THIS CONTRACT IF THERE ARE ANY BLANK SPACES.
    • Whether any lien or security interest is on the residence as a consequence of the contract.
  9. An enumeration of such other matters upon which the owner and contractor may lawfully agree.
  10. Any other provisions otherwise required by the applicable laws of the Commonwealth.
  11. A clause informing the owner about:
    • any and all necessary construction-related permits
    • that the contractor must obtain such permits.
    • that owners who secure their own building permits or deal with unregistered contractors will not be eligible to access the Guaranty Fund.
  12. Acceleration of payment: No contract can contain an acceleration clause that would require any part or all of the balance not yet due to be declared due and payable because the contractor deems himself to be insecure.
  13. A sentence explaining that no work can begin prior to the signing of the contract and the owner receiving a copy of the contract.
  14. An arbitration clause for settling disputes, signed by all parties, in 10 point type or larger;"The contractor and the homeowner hereby mutually agree in advance that in the event that the contractor has a dispute concerning this contract, the contractor may submit such dispute to a private arbitration service which has been approved by the Office of Consumer Affairs and Business Regulation and the consumer shall be required to submit to such arbitration. NOTE: The signatures of the parties above apply only to the agreement of the parties to alternate dispute resolution initiated by the contractor. The owner may initiate alternative dispute resolution even where this section is not signed separately by the parties."

Contact

Office of Consumer Affairs and Business Regulation

501 Boylston Street, Suite 5100, Boston, MA 02116
Originally posted by @Derreck Wells :

DO NOT MAKE THAT PAYMENT!!!!!!!!!

It is illegal in MA for a contractor to require more then 1/3 of the cost of the job upfront unless there are custom materials that total more than 1/3, then they can charge the amount of the custom materials. 

Check out line #6 ...

The following fourteen items must be included in any contract between a homeowner and a registered home improvement contractor for home improvement work. Homeowners and contractors with questions about required contract terms or the Home Improvement Contractor program, should contact the Office.

  1. The complete agreement between the contractor and the owner and a clear description of any other documents which are part of the agreement.
  2. The full names, federal I.D. number (if applicable), addresses (NOT P.O. Box numbers), of the parties, the contractors registration number, the name(s) of the salesperson(s) involved, if any and the date the contract was executed by the parties. The contractor's registration number must be on the first page of the contract.
  3. The start and completion dates of the project.
  4. A detailed description of the work to be done and the materials to be used.
  5. The total price of the work.
  6. The payment schedule, with the dates and the amount of each payment stated in dollars, including any finance charges. Any deposit required to be paid in advance of the start of the work cannot exceed one-third of the total contract price or the actual cost of any material or equipment of a special order or custom made nature, which must be ordered in advance of the start of the work to assure that the project will proceed on schedule. Final payment cannot be demanded until the contract is completed to the satisfaction of all parties.
  7. Signatures of all parties.
  8. A clear and conspicuous notice stating:
    • That all home improvement contractors and subcontractors shall be registered and that any inquiries about a contractor or subcontractor relating to a registration should be directed to the Office of Consumer Affairs and Business Regulation Home Improvement Contractor Program, with the Office's address and phone number.
    • A 3-day cancellation notice, informing you of your right to cancel your contract if you signed the agreement in your home, or at a place other than at the contractor's office or business;
    • All warranties on the owner's rights;
    • A statement warning, in ten point bold type or larger, directly above the space provided for the signature, the following: DO NOT SIGN THIS CONTRACT IF THERE ARE ANY BLANK SPACES.
    • Whether any lien or security interest is on the residence as a consequence of the contract.
  9. An enumeration of such other matters upon which the owner and contractor may lawfully agree.
  10. Any other provisions otherwise required by the applicable laws of the Commonwealth.
  11. A clause informing the owner about:
    • any and all necessary construction-related permits
    • that the contractor must obtain such permits.
    • that owners who secure their own building permits or deal with unregistered contractors will not be eligible to access the Guaranty Fund.
  12. Acceleration of payment: No contract can contain an acceleration clause that would require any part or all of the balance not yet due to be declared due and payable because the contractor deems himself to be insecure.
  13. A sentence explaining that no work can begin prior to the signing of the contract and the owner receiving a copy of the contract.
  14. An arbitration clause for settling disputes, signed by all parties, in 10 point type or larger;"The contractor and the homeowner hereby mutually agree in advance that in the event that the contractor has a dispute concerning this contract, the contractor may submit such dispute to a private arbitration service which has been approved by the Office of Consumer Affairs and Business Regulation and the consumer shall be required to submit to such arbitration. NOTE: The signatures of the parties above apply only to the agreement of the parties to alternate dispute resolution initiated by the contractor. The owner may initiate alternative dispute resolution even where this section is not signed separately by the parties."

Contact

Office of Consumer Affairs and Business Regulation

501 Boylston Street, Suite 5100, Boston, MA 02116

 OP isn’t in MA

 OP isn’t in MA

 No, but there's likely similar laws in most states.

Hi drew. I️ use to sell roofing. It’s the most complained about industry in the us. Guys ask for money then rip off your roof climb down and knock on your door and ask for more. My company did no money down and any contractor I️ work with installs on their dime and gets paid after. I️ wouldn’t pay until the job was done.

Pay for materials upfront. You could set up a schedule for labor payment according to how much work is done but pay the largest balance at the end.

I was talking with a buddy that owns a painting company in Minneapolis today and they don’t pay their subs until the job is done.

@Drew Denham I'm with everyone else.  Find someone else.  I know too many people who have been taken by large upfront costs. 

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