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Question DetailsAsked on 11/23/2017

SHOULD i PAY UPFRONT TO THE CONTRACTOR FOR THE ARCHITECT, ENGINEERS AND PERMITS?

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Permits have to be paid for up-front - but generally are not applied for before the architect's/engineer's plans are done because the plans have to be submitted to get the permit (for most types of significant work), so the timing comes into it. Permits certainly have to be paid for when applied for - which sometimes is major bucks in areas where the permit fee is a percentage of estimated construction cost or contract amount.


I would not be paying significantly before the bills are actually due and payabel - so for instance the permit, if not being filed for until the plans are ready, should not be paid until then. Sometimes a grading and earthwork permit will be filed for up-front, then amended or added to with the full building permit for the structure once the plans are submitted and approved by the building department.


Some architects and engineers will not do work for contractors without advance payment because of bad previous experiences, and they tend to be a lot more reluctant to file liens on homeowners because the contractor has not paid them, so some require a substantial percentage up-front - but sometimes only about 50% or so, not necessarily 100%. Course, some do their work in short order - like a $500-1000 or so septic system design by a civil engineer might only take a day or few so total payment up front is not such a big difference in timing of payment.


Being sure the payments actually got to them is important too - a good contract requires the contractor to submit copies to the owner (and/or commonly to escrow or construction lender as well) of all subcontractor billings when he gets them, and copies of the "paid" statement or invoice when it is paid so you know the payments are actually getting to the recipients rather than going into the contractor's account or (more commonly) being used to fund another job underway - though a good scam artist can use a photocopier and PAID stamps and such to defraud you anyway.


Of course, if your contract calls for up-front payment for those items, you are already pretty much past the point of negotiating when payments are due - so unless you can argue their services are a month or more out still, so not yet due, you don't have much choice there.


Bear in mind, if progress payment schedule was not part of the contract (and should be made a part by amendment before it gets out of hand), beware of the possibility down the road of similar demands for $ up front (other than per contract terms) for major materials purchases, equipment rental, subcontractors, etc. Sometimes you do have to pay up-front (and should see documentation from the vendor that they did receive payment) like for custom ordered items, windows and doors, etc. The contractor should not be financing your entire job out of his pockdet till job completion (unless contracted that way, like is common with some new construction where he is financing construction and rolls that cost into the price), but you need to be careful the contractor is not getting "ahead of you" on payments so you are "in the hole" as far as completed work compared to the amount paid to date. Having paid 80-90% of the contract amount for COMPLETED work at each progress payment point is common, with additional hold-backs from the progress payments for significantly incomplete work or work needing rework to be corrected before you pay for that work item.

Answered 11 months ago by LCD




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