Profile picture for ronaldwalker7933

How should I pay the contractor/builder for a room addition to my home?

Contractor wants one-third payment to start; another one-third at completion of
 foundation; and final one-third at job completion.
  • February 27 - US
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Answers (4)

Profile picture for wetdawgs
Yes, this is pretty typical.   Sometimes the up front payment is larger (perhaps 50%) because they have a lot of supplies to purchase.   Make sure the final payment is AFTER all the permits are signed off.
  • February 27
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I think for the most part your question was answered below. I wanted to add that you also want to have a release of lien signed by the contractor and any subs he/she may use. Nothing is worse than having a lien on your home only to find out the GC never paid his sub(s) for work done.

Sincerely,

Matt Marshall
Realty National

  • February 27
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Profile picture for MountJuliet
That is a pretty typical payment schedule for additions or remodels in Middle Tennessee.  There are times when the second 1/3 is at dried in compared to foundation depending on the size of the work.  

It's always best to research the contractor, have specific dates for the project completion and get a breakdown of the allowances if you're selecting any items such as carpet or lighting fixtures in a written agreement/contract.  Many complaints are based on delays - so I'd suggest adding a clause to the agreement for delays.

Best,

Bob Sorey

PS - Get a copy of their general liability insurance policy just in case something goes wrong.
  • February 27
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I would first talk to the building inspector about your contractor (get previous jobs from local inspectors and then call those jobs and ask those owners for recommendations! (dont use the names and numbers of jobs the contractor gives you, those are useless),  I would then validate insurance and lic. the contractor has?, I would then check any of any civil actions filed on the contractor name or the personal name who owns the contacting company? I would ask if you can pay suppliers directly for materials?

I would then pay 1/3 up front. 1/3 after foundation & rough framing, 1/3 at completion.

A small but important technicality: Request signed lien releases from all major subcontractors and suppliers before making final payments. A lien release guarantees that the contractor has fully paid his materials suppliers.

Hope this helps! almost forgot... MAKE SURE THE CONTRACTOR PULLS THE PERMIT! (the building inspector will make you aware of this anyways because your going to talk to him first)
  • February 27
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