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Deposit and payments to the contractor

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Posted by: from Mississauga
9/25/2016 at 1:26:00 AM

Hi,

I would like to ask about the payment to pay to the contractor.

How much should the deposit be as a percentage of the total quote?

When should the payments to the contractor be paid? When should I pay the last payment to the contractor?

Should I hold the last the payment 45 days after finishing the job, is what I have known from the information I got from your website?

What if the contractor got the deposit end did not show up? What should I do in this case?

Thank you,

Suhair

REPLIES (5)
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Date/Time9/25/2016 at 9:27:14 AM

Hi Suhir,

Deposit varies from project to project. I take around 20%-25% deposit if it's labour mostly. For example bathroom reno where owner provides all the fixtures and materials.

If theres lots of material cost involved in take material cost + 10% labour as a deposit. Sometimes it's more then 50%-60%. We did potlights at a custom house where owner wanted a very specific fixture and trim design. Just 1 trim cost 89$, do the math with over 100 potlights around a house.I took 14k deposit on 22k job.

Remember that there's also a lot of customers who don't pay, so contractor have same thoughts as you regards to payments. I would never start a job without deposit with a new customer.

Holding up money again depends on a job. If it's a painting job and you like it why wouldn't you pay on a same day??? What's the reason to hold money for 45 days. If it's electrical that passed Esa inspection and certified?

You should hold last payments for jobs like shower or basement reno just to see if nothing comes up in a few weeks, new cracks appear on a bad taping job, bathroom might leak.

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Curtis from C2 Projects in Cochrane
Date/Time9/25/2016 at 10:32:40 AM

Hi Suhair,

It varies, you should abide by the payment schedule set by the contractor in the contract you signed.

It really boils down to trust, there are a variety of reason why people.choose a contractor. Whether via referral, you like their work, works with your budget.

The majority of the time where people get scammed are from the guys whose price is far lower than anyone else's bid. They'll either take the down payment and never show up, do a bit of work and realize they under bid and won't show up after a while, or they will ask for more money in the end.

On most jlbs intake 50% on the day I start which typically the material is on site and then I take 2 more installments of 25% of the bill. Final one due on the day the job is finished.

Hope that helps.

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Date/Time9/25/2016 at 11:50:02 AM

Well every contractor is different. Some ask for 50% up front so they can get material and pay their guys for labour. Then once job is done and inspected you pay the other 50%. Thats how I do it but I always put a contract in place so your money is safe and you know its going to material and labor !! Now some contractors only ask for 20% depending on how big the job is if it is a 20,000 job you can not expect the contractor to take 10,000$ out o his pocket to pay his guy and material then you don't pay or don't have that much then he will lose all the money and court will be involved, now for giving him a deposit and him not showing up !! Did he give you a contract or any paper work if not I might be afraid that you have lost the deposit now if there is proof you paid him you can go to court but if it was cash then its kind of hard to prove you paid him right !! Your best bet is next time just ask the contractor if you pay for material can you give him a first payment half way threw the job so half the work is done he gets half the money then once done he gets the rest this way he knows he has to do half the work before he gets paid half the cash and this way if he takes off atlas you have half the work done and still have the other half of the cash to get it done !!

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Date/Time9/25/2016 at 10:00:32 PM

Deposit and payments depend on few factors, such as if the client is new or returned client, type of work, materials are included or not.....etc.

I am always charging %15 upon signing the contract, %20 upon starting date, %55 when the work is in progress and the %10 upon all work compilation.

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Date/Time10/2/2016 at 3:50:09 AM

When You hire a Contractor that has good intentions of completing your job he usually will only ask for at most of 30%... That usually is used for materials. A stable contractor doesn't usually asked for deposits up front...

WHEN I perform services to my customers I either place the order for materials myself, & have the customer pay for it, or I supply the materials with 30% down... I "NEVER" take cash from a customer... To ensure that my customer feels more comfortable, I suggest Email Money transfers . It has limits of $2,000 per transaction however the customer has VALID proof of the payment.

In all fairness at 1/3, 2/3 & 3/3 of the work progress the contractor might ask for a payment.

If your going to withhold the final payment for 45 days expect a lien being put on the property. Unless your a construction company the contractor will find it odd and take action against you fairly quickly... I'm not even sure if a non commercial job can do a hold back.. it's only 10% of the complete money owing. Less Materials.

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