Contractor Charging Liability Costs Twice?

Question

Hello all,

This is my first time posting here. I've been a realtor for five years and just recently got into flipping. I'm in the middle of renovation of my first project. The contractor I'm using came as a somewhat trusted recommendation from my father. We're in Florida and he has a general builder's license. He's working for $25/hour and I am procuring all supplies. When we pulled the first permit, he charged me $500 plus the cost of the permit. I assumed the $500 is to cover his cost of liability insurance considering he's getting paid $25/hour for his time to get go get the permit, wait for inspections, etc.

On my first bill, he has the $500 fee plus reimbursement for the actual city permit fee for doors and windows. Then, shortly after, we end up having to pull a second permit, for general remodeling. On the second bill, he as the city's permit fee, plus his $500 again.

Does this seem correct? It seems that he has already collected the $500 to cover his liability insurance costs, and he's already being paid $25/hour to get the permit.

I'd appreciate any thoughts or input on this!

Thanks in advance,

Zach

Patrick L. · Answer

Fair enough....it was the $25/hr thing that made me think he might not actually be licensed.   I don't know any licensed and insured guys that will work for that rate around here.

Wayne Brooks · Answer

Why are you assuming it's for liability insurance, and asking us instead of asking him?  That may be his "charge for my ability as a GC to get your permit since you can't get one yourself" fee.

Zach S. · Answer

Hah! Not quite, but I understand what you're saying. I think you might be right with your second point, though. I'm going to talk with him about it and try to get him to more clearly explain to me exactly what the $500 is for. It might be reasonable to charge it twice, but I get the feeling he's just seeing if he can slip it in there twice and get away with it, which is a little frustrating.

Zach S. · Answer

That makes sense. I've been pretty surprised he'd work for that rate. The first contractor I got a bid from wanted to bid the job as a whole. Based on my assumption of the time it'll take, the first guy was at ~$200/hour!

Zach S. · Answer

Thanks for the advice! Yes, I did actually look him up. He's actively licensed. But, again, thank you for the suggestion!

P.s. I actually did ask him about the $500 the first time around. Originally, it was $1500. I asked my father about it and he said the last time a contractor pulled a permit for him, he charged ~$300, so I talked to my contractor about that, and he came down to $500. I explained I'm already paying him hourly to run around, and he's the only person working on the job, so he doesn't have liability for anyone else's work. He agreed with me and adjusted the price. So, I'm assuming it's for liability or else he would have educated me when I asked about it.

Zach S. · Answer

Thanks Wayne. I'm asking here about the situation in order to collect information relevant to the situation prior to discussing it with my contractor. I'm explaining the situation so others can give me their feedback, advice and suggestions.

If he's charging me a fee for possessing a license, that seems out of line to me, not to mention if that is truly the case, he's already collected that fee once for this project. Thoughts?

Mike F. · Answer

Your guy is $200 an hour, he just collects it differently, like $500 at a time for permits so far...LOL

Sounds to me that he is charging you $500 for getting the permit, not sure where liability insurance enters into any of this.

Patrick L. · Answer

Did you verify his license?   A lot of guys say they're licensed when they aren't and can even pull permits for you but often it's under someone else's license who they have to kick back a fee to each time.   I would have asked him about the $500 on the first invoice rather than assuming anything.

Contractor Charging Liability Costs Twice?

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