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Old 03-20-2009, 11:39 AM   #1
Aud
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Contractor payments - PLEASE HELP


New to the forum, and need some help.
Background: husband wanted a log home, his friend is a contractor - and though we don't know his work - husband felt as his friend, he'd have our interests in mind, and even though the friend has no experience in log home building...blah, blah...you get the picture.

A percentage of what he would get at the end after the
home was finished was arrived at - 7% of the
cost of building the home.

I'm getting pencil to paper and now am wondering what exactly constitutes the "building of the home". Being a friend of husband, he never got a listing or an understanding.

The friend proved to be a challenge...I was more the contractor then he. He paid the roofer, when clearly the roofer did a terrible job (yes, you really DO
need flashing around a fireplace!!); and what happened to the roofridge vent, there isn't one; and the front of the house was leaning forward and I had to call it to his attention; and he even though reminded 20 times to
order several things he neglected to do so...the list goes
on. Most of the time the extent of "contractor" was for
him to point me in the direction of who he uses for
carpeting or getting the plumber lined up. I was there
to watch everything out there, and watch over him.


Anyway, like when it comes to electric - I would pay for
installation and labor, but do I have to pay for the fixtures themselves? How about carpet/ceramic tile - do
I pay for the carpet and ceramic or just for the labor to
install? Seems silly, that if they give me a 10%+ discount, that I pay him back 7% of it.

How about the stain for the log home - labor or stain and labor? Exterior and interior.

I don't think I should pay the 7% fee for his insurance, porta-jon, dumpster rental, etc.

I just need a guideline to help me. This guy is a friend of the husband, but I don't want to pay more than we
should. I paid for everything along the way to the sub-contractors or from invoices the contractor gave me - so
everybody has been paid except the contractor himself, so I'm not worried about any liens.

Any and all help would surely be appreciated!!

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Old 03-20-2009, 12:03 PM   #2
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Contractor payments - PLEASE HELP


There isn't 100% guideline
All of this should have been spelled out in a contract BEFORE work started

You need to sit down & talk to your contractor & arrive at an agreement

In order to get a final permit inspection & occupancy everything needs to be completed
All fixtures & electric/plumbing installed & inspected
Who pays for what is between you & the contractor


Last edited by Scuba_Dave; 03-20-2009 at 12:55 PM. Reason: sp
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Old 03-20-2009, 12:47 PM   #3
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Contractor payments - PLEASE HELP


Quote:
Originally Posted by Aud View Post
New to the forum, and need some help.
Background: husband wanted a log home, his friend is a contractor - and though we don't know his work - husband felt as his friend, he'd have our interests in mind, and even though the friend has no experience in log home building...blah, blah...you get the picture.

A percentage of what he would get at the end after the
home was finished was arrived at - 7% of the
cost of building the home.

I'm getting pencil to paper and now am wondering what exactly constitutes the "building of the home". Being a friend of husband, he never got a listing or an understanding.

The friend proved to be a challenge...I was more the contractor then he. He paid the roofer, when clearly the roofer did a terrible job (yes, you really DO
need flashing around a fireplace!!); and what happened to the roofridge vent, there isn't one; and the front of the house was leaning forward and I had to call it to his attention; and he even though reminded 20 times to
order several things he neglected to do so...the list goes
on. Most of the time the extent of "contractor" was for
him to point me in the direction of who he uses for
carpeting or getting the plumber lined up. I was there
to watch everything out there, and watch over him.


Anyway, like when it comes to electric - I would pay for
installation and labor, but do I have to pay for the fixtures themselves? How about carpet/ceramic tile - do
I pay for the carpet and ceramic or just for the labor to
install? Seems silly, that if they give me a 10%+ discount, that I pay him back 7% of it.

How about the stain for the log home - labor or stain and labor? Exterior and interior.

I don't think I should pay the 7% fee for his insurance, porta-jon, dumpster rental, etc.

I just need a guideline to help me. This guy is a friend of the husband, but I don't want to pay more than we
should. I paid for everything along the way to the sub-contractors or from invoices the contractor gave me - so
everybody has been paid except the contractor himself, so I'm not worried about any liens.

Any and all help would surely be appreciated!!
I'm not trying to be a wet blanket here. And Dave wasn't trying to be evasive. But I do want to point out that you are involved in what could become a far-reaching legal entanglement. The simple reason for this is that there are a multitude of laws governing the way contracts and satisfactions of payment are to be handled. And, although you do not realize it, you may well be STILL responsible for payment due those subcontractors even though you already paid them.... IF you are not in possession of waivers of lien from all those people you paid.

It may not be too late to do this, but it is something any contractor knows, and he needs to do this for you. You are required by law, for your own protection, to obtain waivers of lien from each and every supplier and subcontractor involved doing work on your project. No matter who you've already paid, they can still legally come after both you and your contractor with the claim that they weren't yet paid... not by you, nor by him either.

Yes, with cancelled checks and other documentation, you would likely prevail. But it could still entail lengthy, aggravating, and costly court hassles. Meeting all these legal requirements is part of the contractor's job. If he is, indeed, a contractor he knows this. Get him on the ball with this today.

Hopefully, you have already taken care of this very big detail, and this post was unnecessary.
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Last edited by Willie T; 03-20-2009 at 12:54 PM.
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Old 03-20-2009, 01:03 PM   #4
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Contractor payments - PLEASE HELP


Oh, dear - now I'm worried. This was handled by my husband and his friend very loosly. There really isn't
a contract between them. I am in possession of all
the paid bills, only a handfull were paid by him - like
for Lowe's or Home Depot, otherwise I took care of it
when presented - so I do have paid checks, etc.

My original question was what he's entitled to in regards
to items I don't feel he should - like the lights, or carpet, I can see the labor for such items, but not the
items....then I think, we need toilets and they should be
included....it's confusing to me.

Guess we'll have to go item by item on these things and
decide between us.

Thanks for some very important information that we didn't get!! I'll see what I can do about it.

Aud
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Old 03-20-2009, 01:06 PM   #5
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Contractor payments - PLEASE HELP


Quote:
Originally Posted by Aud View Post
A percentage of what he would get at the end after the home was finished was arrived at - 7% of the
cost of building the home.
From your own statement he is entitled to 7% of the entire cost of building the house. That would seem to include everything - all costs
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Old 03-20-2009, 01:18 PM   #6
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Contractor payments - PLEASE HELP


Quote:
Originally Posted by Scuba_Dave View Post
From your own statement he is entitled to 7% of the entire cost of building the house. That would seem to include everything - all costs
and yes, insurance porta jon dumpster are all part of the job. if he wasn't working for you, he wouldn't need insurance. Overhead. We all have it. And yes some guy's is bigger than others.
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Old 03-20-2009, 01:19 PM   #7
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Contractor payments - PLEASE HELP


It's way past time to do this, but you may be able to at least salvage the friendship by setting some determinations of financial responsibility now.

You came here for suggestions, so I'll try to give you some from 26 years of being a GC. Make a list of everything that bothers you about the payment arrangement. Sit down with him, and go over each item.

Be prepared to give up some things. After all, he did invest time at your project that he could have been making money elsewhere.


Things like insurance? Well, you both need to be realistic about it.
  • One, he HAS to have it for your job to go forward. So it HAS to be paid.
  • But how much? He pays a yearly premium, and unless he spent that entire year on your house, his payment to the carrier needs to be pro-rated to reflect the portion that was invested in your project.
The Port-a-John? Legally, he has to supply one. It's a job cost. Personally, I would see that as 93% his cost, 7% yours. (Or let him pay it all, then you give him 7% back) I'll tell you now, this thought about this kind of thing will meet with resistance here, but that's how I see it in the arrangement you made.

The discounts? Did you get them all on your own? Or were you given them through his relationship with the vendors?

If you did it without any of his influence, then what you paid is the cost, period. But if you would not have seen those discounts without his influence, then normal retail would be the cost, and he's entitled to 7% of the discounted part too. (Truthfully, if he was doing this job on his own, he would have marked it back up anyway... that is the incentive the vendor offers him to do business with them.)

Are you seeing the give and take? You both need to see and agree on the logic of whatever division you come up with, item by item. And if he spent time getting the permitting and handling the inspections, that needs to be respected as worthy of remuneration. I'd see that as him getting 7% of the permit fee... even though you probably paid it.

But this has to be up to you... both of you. We can only give you our personal opinions.

I know this is probably beginning to sound a little one-sided to you... in his favor. But here is something you and he need to be reminded of.............. He went into this knowing all of his projected costs, labor, insurance, overhead, worker's comp (a biggie!)....... and he agreed to 7% of the whole, total price. At that price, he was probably trying to give you all the break he could.

Frankly, I would never have gone so low. So we have to assume that he was expecting to see 7% of the final bills, period, no reductions for discounts, brother-in-law help, etc. If he subtracted all sorts of various and sundry miscellaneous items all along the way, 7% really wouldn't be very much.

Add up all your invoices. Figure 7% more, and add it in for a grand total. Do you honestly think the average GC in your area would have given you the house for that figure?

Interesting thought............ He's getting $7,000 for each $100,000 of equity you get to watch appreciate in the next few years.
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Last edited by Willie T; 03-20-2009 at 01:53 PM.
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Old 03-20-2009, 03:09 PM   #8
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Contractor payments - PLEASE HELP


I am indeed gratefull for your thoughtfull and well written answer to my queery. My eyes and feelings
in this matter have now changed to see the error
of my way of thinking...not completely, but surely
almost so.

I guess I have just been so gosh darned irritated
with the unprofessional nature of this contractor. It seems stupid to me that I was acting more
like a contractor then he was - I was expecting him
to be our "eyes & ears" cause we didn't know anything
about building - period. I sure got a big lesson and
learned quick. It irritated me and still does, that he
wasn't as on top of things as he should have been and
clearly not very knowledable. He actually okayed wall
outlets to be put in down on the floors for floor outlets
with no covers or anything on them, he had the fireplace
footing made at least a foot too shallow, he put the
crawlspace acess door on the wrong side, even though
I specified tankless water heaters (so many times I lost
count), he never looked into them until the last minute and then it was too late for the electrician, though I specified brown outlets, white were put in and he okayed them...there's so much more!

It's our own fault for not being more pro-active and having a friend that we couldn't really trust. If he wasn't a friend of my husbands I would have waved bye-bye long ago...anyway, now the house is finished and it's looking good, we need to get his payment behind us so
everybody is happy.

I will take everything you wrote under advisement, talk to the friend and my husband, go over everything one by one and that's it. In the end, I know 7% is not that much and though he had no other homes he's built over the summer, he made a lot of trips down there and the
cost of gas was pretty bad for awhile.

Thank you to everybody - nice forum and I'll be back for sure to ask more questions of all you knowledgable folks!
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Old 03-20-2009, 03:52 PM   #9
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Contractor payments - PLEASE HELP


FWIW- A "Contractor" is not the same as a GC.

Additionally, I know of many, many inexperienced and unskilled individuals that have sold themselves under the "self-given" title of: Contractor, General Contractor, Carpenter, etc...

Example:
Quote:
The friend proved to be a challenge...I was more the contractor then he. He paid the roofer, when clearly the roofer did a terrible job (yes, you really DO
need flashing around a fireplace!!); and what happened to the roofridge vent, there isn't one; and the front of the house was leaning forward and I had to call it to his attention; and he even though reminded 20 times to
order several things he neglected to do so...the list goes
on. Most of the time the extent of "contractor" was for
him to point me in the direction of who he uses for
carpeting or getting the plumber lined up. I was there
to watch everything out there, and watch over him.
By the hackdom, lack of quality, and no concept of general construction and building requirements (missing chimney flashing, as an example)....I tend to think your husband's friend is a self-titled "contractor", with very minimal, and possibly zero, experinece in the custom home building field.


Good Luck with everything.

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