Can I have my own Payment Contracts?

Question

Some contractors have pretty detailed scopes and contracts, including payment schedules.  Is it unheard of for me to add an additional contract that only outlines the payment structure?  This way I can include penalties and fees associated to unfinished work or over schedule work?

Christopher Brainard · Answer

You should insist on having a draw schedule and penalties included with every contract that you sign with a contractor. This is not unusual in the slightest and is necessary if you're serious about investing. If there is no timeline, you will often find your project put on the back burner for project that do have timelines specified.

-Christopher

Manolo D. · Answer

@Matt Michaelis Best way to do it is put penalty clause. I.e. mine is usually around $1,000/day and say 60 calendar days. I’ve done 120 day projects in 4 weeks. My clients tho are not investors, usually i carry 100k before i bill them, i.e for a 50k project, i bill once at the end after the project, before the punchlist, they withold 10% of my contract and have 35 days to pay it, so any kinks, they have that timeline to call me and have it addressed. Some contractors are being burnt by clients where they have to chase their money (same goes to investors towards contractors), so to control those, have them make milestones or just pay a “line item” (i.e framing $2000, drywall and taping - $5000; just pay 2000 when they pass framing inspection). Be careful with overloading (i.e framing $6000, drywall and taping $1000; they can actually finish framing and leave your job without the law chasing them). Hope this helps. If they have “very detailed” scope of work, they know what they’re doing, so it’s easy for them to put line item price per work phase.