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Contract terms, is this standard?

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  • Feb 12th, 2020 10:15 am
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[OP]
Deal Addict
Feb 16, 2018
1292 posts
1306 upvotes

Contract terms, is this standard?

We used to have a handyman who would deal with all our needs for our rental properties and our own home, he unexpectedly passed away. I need some work done and I received a quote from a company I have never dealt with for $1700.00. Their terms and conditions state this.

Are these terms, specifically the payment terms typical?

Terms & Conditions

This is an estimate, not a contract for services. This estimate is for completing the job as described above. It is based on our evaluation and does not include material price increases or additional labor and materials which may be required should unforeseen problems arise after the work has started.

We require a deposit of 10% on signing, 50% on the first day before work starts, Another installment of 35% is due prior to completion. The final 5% is due on the day of completion. A 1.5% late fee will be applied to outstanding balances on a weekly basis.


Materials for this job might be a couple hundred bucks. 60% upfront before work has started seems ludicrous to me. Previous handyman worked for us for years and billed us after job was completed. Even for jobs that were $20-25k. Before our old handyman we had our basement finished about 15 years ago for $30k and all we also paid nothing until job was completed.
Last edited by HghSsociety on Feb 9th, 2020 2:51 pm, edited 1 time in total.
8 replies
Member
May 31, 2017
332 posts
88 upvotes
The contractor we've been working with for the last few years has the following schedule:

10% at signing
40% at start of project
40% at substantial completion
10% hold back

That's for the bigger jobs. For the small jobs (like the first one he did for us) he just invoiced us after the fact for the full amount, even though his contract has this schedule written into it.

I'm assuming it's all pretty standard.
Deal Guru
Jan 25, 2007
12147 posts
7338 upvotes
Paris
Windows we do either 50/50 or 30/70.

5% at the end isn’t enough. 60/40 is probably fine.
Deal Expert
Aug 2, 2001
18118 posts
9175 upvotes
You are responsible for a 10% hold back - this prevents suppliers and subcontractors from coming after you for additional funds outside of that.

They are likely asking for large amounts up front to increase their cash flow and prevent you from walking away part way through the contract (due to them not completing quick enough is a great example).


Overall I would not be agreeing to terms like that myself and would have questions regarding the stability of a company that requires such customer-unfriendly terms. Especially for a $1700 job.
Deal Addict
Oct 13, 2014
2702 posts
1975 upvotes
Just Moved To Somewh…
You are aware that this contractor is proposing a criminal rate of interest, which I calculate at 78%/annum.
#1 - “Don’t irritate old people. The older they get, the less “Life in prison” is a deterrent."
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Deal Addict
Nov 17, 2012
4724 posts
4224 upvotes
Toronto
Any changes to the estimate (i.e. additional labor or material costs due to unforeseen problems) should be approved by you before the costs are incurred.

Get more quotes and contracts. At least you got a written agreement, which is a good start.

If you paid your previous workers after the job was completed on a $30,000 job, your previous contractor was WAY too trusting. I might get away with that if it was my father, but unlikely.

It's in both your interests to have an agreement with a payment schedule laid out. And as others have said, 10% minimum hold-back till the job is completed, inspected by you and all defects are corrected. Not a final payment on the day of 'completion' whatever 'completion' means.
Deal Expert
Feb 24, 2007
15094 posts
2697 upvotes
rcmpvet wrote: You are aware that this contractor is proposing a criminal rate of interest, which I calculate at 78%/annum.
I think that should also an answer on the choce of the contractor.
[OP]
Deal Addict
Feb 16, 2018
1292 posts
1306 upvotes
rcmpvet wrote: You are aware that this contractor is proposing a criminal rate of interest, which I calculate at 78%/annum.
I didn't even notice that, thanks!
[OP]
Deal Addict
Feb 16, 2018
1292 posts
1306 upvotes
torontotim wrote:

If you paid your previous workers after the job was completed on a $30,000 job, your previous contractor was WAY too trusting. I might get away with that if it was my father, but unlikely.

He had been with us for years and took care of all our rentals, he was our go to guy for abou 19 years. So there was a very good relationship there as well as history. I wouldn't expect that from someone new who didn't know us.

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