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Question DetailsAsked on 7/6/2017

Is it common practice for a remodeling contractor to request "proof of funds" prior to starting a project?

The project is replacement windows. I already gave a deposit of 1/3 agreed upon cost. The company wanted a picture of a cashier's check or a credit card authorization prior to scheduling the installation.

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He has yellow flagged you (may have done a credit check and did not like what he saw) or maybe he has had payment problems in your area - and this might well be at least a yellow flag on him too.


Probably not "common" but not unheard of either - he does not want to be out $5,000-10,000 in materials and labor and overhead if you do not pay after they are installed, and enforcing a lien is iffy if the homeowner does not have ready liquitable assets, what with courts more commonly now prohibiting foreclosing on homeowner occupied homes to pay off construction liens. (Some are stretching the estate and bankrupcty "homestead" exclusions to lien actions as well).


However, a picture of a cashier's check is a BAD idea - might be able to electronically process the check without it being in hand, and of course giving credit card info before the work is done is dangerous - could be inferred to be approval to charge the rest of the job.


I would ask him WHY he is concerned, given that you already put 1/3 down.


I would also be somewhat suspicious of whether he is a scammer looking to take you for all he can then skip town - check into his refernces and reviews in detail at least.


A way to resolve it if you trust him but he does not trust you would be to sign an escrow agreement (presumably sharing escrow cost, though if not in the contrat you could force him to pay the fees if he demands that) where the escrow company receives the remaining 2/3 of the payment and holds it in escrow, then pays it to him upon presentation by him of the final invoice AND certification by you that the job is complete and payable.


Another would be to get a cashier's check made out to his company and show it to him (being sure he does not have a cellphone camera in action at the time) but not let him take a picture or copy or such.


How much of a red flag this is on the deal is your judgement - he obviously does not trust you (or is trying a scam), so might be time to reconsider whether you trust him. And if the proof of funds was not a requirement of the original contract, he cannot unilaterally add it as a requirement now, so if he refuses to perform you could potentially call his Bond to require completion of the job at the original contract price, by another contractor (though their initial offer or response would undoubtedly be to just refund the deposit and cancel the contract, which might or might not be the best for you).

Answered 1 year ago by LCD




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