Paying contractor 20% after the house is sold.
Hi,
So I have a contractor who is willing to take the last 20% payment after the house is sold. 80% or so will paid weekly on milestone basis. The project will take appx 6-7 weeks max.
The situation is that I have a house under contract and I can only arrange 80% of the bid and that's why I asked him can he wait till the house is sold. He agreed as we both know it is a hot area and house will sell in a month.
And even if house does not sell by that time I will have additional 20% as well. My question is what should be putting in contract incase things go sideways. What should I be concerned about. liens? etc.
Thanks in advance
Most Popular Reply
Put into the contract the specific terms of the agreement. A few things to consider:
- Does the 20% include overages/change orders?
- Will he wait any amount of time necessary? Or is there a time limit at which he gets the money even if the house hasn't sold?
- Will he forfeit his right to lien the property after some period of time, in which case he's taking a risk if he hasn't gotten paid in that time frame?
- Does he get paid off the HUD? Or will you cut him a check? If you're cutting a check after closing, he no longer has the ability to lien the house, putting him in a bad spot.
- Will the closing agent ask for lien waivers at closing? Will you have one from him?
- Will you pay interest on the amount owed? Or is essentially an interest-free loan?