Builder contract payment structure

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Old 06-12-17, 08:34 AM
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Builder contract payment structure

I'm having a garage addition and mudroom built this summer and just got the scope of work with project cost and payment structure. I was surprised to see that the builder want's a 50% deposit before beginning work, 50% when it is nearly complete, and the remaining 10% after final walk through. Is this pretty typical? It is a reputable company, so I'm not worried about the work getting done. I just thought 50% was a little extreme without having done anything but hand over the drawings so I can submit them to the county to obtain permits.
 

Last edited by mossman; 06-12-17 at 08:53 AM.
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Old 06-12-17, 09:07 AM
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Business practices vary in different locales but around here the 1st payment usually doesn't start until the work is started or materials are delivered. It is typical to hold the last 10% until the job is completed and signed off.
 
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Old 06-12-17, 10:06 AM
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Umm... You've agreed to pay him 110%?
 
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Old 06-12-17, 10:12 AM
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Sorry, I meant 50%, 40%, 10%
 
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Old 06-12-17, 10:46 AM
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I agree, that does seem a little front-loaded for my taste.
 
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Old 06-12-17, 01:08 PM
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I agree. I'm going to contact him and see if we can spread it out a bit more. Such as 25% upfront, 20% after foundation work complete, 20% after framing, 20% after roofing/siding/windows/exterior finishes, 10% after concrete work (driveway, walkway, garage slab), 5% final walk-through.
 
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Old 06-12-17, 01:20 PM
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Eh, I can see him saying that's too complicated. But, nothing wrong with giving it a shot.
 
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Old 06-12-17, 01:24 PM
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I can see him walking away with that spread. Maybe 25%, 50%, 25% would be more acceptable.
 
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Old 06-12-17, 01:24 PM
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Around here on new residential homes [not sure about additions] there are generally 3 payments along the way with 10% after completion/sign off.
 
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Old 06-12-17, 01:27 PM
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I proposed 25/20/15/20/10/10. We'll see what he comes back with. I agree, maybe overly complicated.
 
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