Will you have a mortgage? Banks typically have a schedule the payments must adhere to. If the GC's schedule is more aggressive than the bank's then you will have to come up with the difference.

You don't want the GC to get ahead of you on payments. Meaning, if he walks (or you fire him) you want him to have been paid for what he did, but you don't want to be in a position of trying to get money back. IME, most of these schedules are overly front-weighted.

It is hard to say if that schedule is front-weighted without knowing more. How much site work is required? What is involved with your foundation (a foundation in San Fran is quite different than other places, for example). What type of septic do you need?

I would hire a construction attorney to review the contract with you. A home is likely the most expensive thing you will ever buy. It is worth spending the money on an attorney to help you. I have never seen a GC contract that I would recommend signing as-is.

Sounds like a similar payment schedule as my GC - who coincidentally disappeared in the middle of the night leaving 13 houses in various states of construction. The Attorney General advised the homeowners that they would most likely never see any of the money that the GC took.

IMHO, the GC's take should not be included in any draw except the final one. He finishes the work, he gets paid. Not before. And, you should be able to hold back some portion of the final amount until he has filed an "all bills paid affidavit" and enough time has passed that any subcontractors who haven't been paid have come out of the woodwork and demanded payment from you.

Lien waivers (releases) are helpful but they won't protect you from a thoroughly dishonest GC who is robbing Peter to pay Paul... especially if you are the last Peter in line and he is desperate for cash and willing to do whatever it takes to get you and your bank to release money to him.

When your GC gives you lien waivers from subcontractors, take the time to call up the subcontractors involved and make SURE they actually signed the things, that it was for work done on your house, that the work done is properly described in the release, including the dates of the work. Also, make sure that enough time has passed since the release was signed so that, if the GC's check to the subcontractor bounced, the sub is likely to tell you about it when you call. Ditto on invoices marked "paid."

I'm speaking from bitter experience with a thoroughly dishonest GC who gave me fraudulent documents which even my bank accepted. These included lien waivers where the GC had filled in the amounts after the subcontractors had signed them (GC inflated the amounts so he could collect additional money from the bank!). It also included copies of old lien waivers from previous jobs which GC had copied and then changed the address and date on! He also gave us otherwise valid lien waivers from subs to whom he had given rubber checks. And, when all else failed, he created and signed waivers himself covering non-existent sub and then "he didn't understand why the phone number on the waiver was wrong." He also gave me paid invoices that, upon investigation, turned out to be for materials that were delivered to and used in another house he was building at the same time. Still others invoices were ones where he had xeroxed the originals then changed the amounts. And, on others, he made copies of valid payment invoices then stamped "paid" on them himself!

Don't count on your bank to make sure that your payments don't get ahead of the work either. My bank used a form that set completion percentages for various items, but the form had no line item for things like my elevator (which was 5% of the total cost) and did not take into account my extensive decks and porches (which will run nearly 10%) of the total. Because those items which were at the back end of the build weren't even taken into consideration, even the bank's percentages were "front weighted."

After OVERPAYING my GC for the work done, I got hit with lien waivers from subcontractors who basically said - and rightly so - "look, I don't care if you have a lien waiver signed by Mr. A that supposedly covers the painting done on your house, I'm Mr. B and I painted your house and I haven't been paid and I can prove it - so if your GC won't pay me, you owe me."

We fired the GC midway thru our build but we are still in the midst of the lawsuit we had to file to try and get him to release the M&M lien he holds. And would you believe, he is trying to extort additional money from us to provide that release??? Apparently his lawyer's theory is that we will run out of money/energy for the fight and will pay our GC off just to get him to go away.

What you REALLY need from your GC is a performance bond (i.e., insurance that he will finish the job to the specifications of the contract) but such bonds don't come cheap and the builder will expect to pass the cost of the bond on to you.

Make sure the bank & builder are in agreement on the draw schedule. My builder's draw schedule did not match my bank's schedule. The problem was primarily with the bank as they had been provided a copy of the builder's schedule. Fortunately, my builder requested payment only for partially completed tasks (e.g., 50% payment for 50% completion) or full payment for fully completed tasks.

My lesson learned with the bank also highlighted the issue of bank inspections. Banks typically hire a 3rd party inspection service and their construction loan fees factor in the cost of those inspections based on their draw schedule. A builder's draw schedule could involve more inspections and more costs. This should not be a problem if you are using a local bank.

The problems of prepayment noted above have been the subject of many posts over the past 4-5 years. To paraphrase Nike - Just don't do it!

Why not have a title company handle it? You pay them a fee and they take care of the draws, notice of furnishings, waivers, etc. That's pretty common here.

I run the office for a GC. Draw amounts differ depending on the job and bank.

We need a bit more info on your line items.

What percent of the job is paid for when the septic draw is paid? What will be done?

Our septics almost always go in at the end of the job. ( no forklifts etc are running over them).

I'm with 'bevangel', I can't even bring myself to write about our very bad experience with lying, cheating, deceitful builder, otherwise will just get all upset and start crying again!

Apologies to those honest builder/contractors, it's the many, bad ones that make hard working people like us view you all with suspicion and distrust.

So my recommendation is just take it for granted your GC is going to try to make as large a profit off you as possible (yes, even above his 15 -20% in contract). There are many ways he can do this, read bevangel's experience.

Get absolutely everything in writing, from pre-treatment of lot before pouring foundation, to clean-up and grading of lot when finished.

Get a good real estate attorney to review your contract as to the building materials, size/quality/quantity etc, start/finish date, and set a reasonable payment schedule that makes sense to you,(if your bank hasn't already), and yes good builders have credit at lumber and supply stores, so apart from initial permits and fees he shouldn't need more until he starts paying for materials and labor for work done on YOUR house.

We also are in litigation trying to recover $$$. We started paying the subs ourselves half way thru build otherwise it would be a whole lot more.

Our house also has a lien on it from the cement company. From the ongoing, criminal investigation, it turns that GC did pay them for pouring driveway and sidewalk, but cement company say they applied that payment to previous bills the GC owed!

We did have several other greedy, criminal subs claim they were owed money once word spread that our CG was in financial trouble. We had actually had paid them ourselves and had the canceled checks to prove it.

Our experiences courtesy of GC; forged lien releases, lumber yard deliveries diverted to another build, subs who turned out to be relatives and buddies which did not always equal quality work, substituted lesser quality materials than stated in our contract,(know what your floorplans and contract call for and check your build everyday), did not always use licensed subs as called for in contract, instead used cheaper, uneducated Mexican laborers who could not read directions, not even in Spanish, he did stop using them after we called him on it.

You are making a large financial investment, whether you're self financing or using a bank, it's your money - make the GC accountable!

Bottom line- check lots of references very carefully before hiring any GC. We spent an extra 6 months looking and it sure is worth it to have a 100% hassle-free GC.

We are carrying the construction loan for a fixed price on our home. Is it acceptable to request an itemized discription of his draw requests? He's requested for "excavation" twice, which we know one was for the initial digging, and this second one was for the very detailed excavation of the footings, but his request simply reads "excavation". Our architect required extra work for the excavation of the footings, which the GC wasn't happy about, but it's on the plans. Anyhoo, I realize that fixed price means "fixed" ;but if he runs outs of money(our money), who will be left to finish this house? Exactly! We've built before, but the GC has always carried the loan. This time we are more than nervous and would be with any GC.

Also, this is the first request where subs have had to come in. The bank won't release any monies unless the work is completed. We have a mechanics lien agreement(from the bank) in the contract. Do we STILL need to get lien waivers from the subs? My husband is on the phone with the bank now asking the same question, but I wanted to put it out to the experts on the forum. Thanks so much for your help.

I do not have an "up front" payment. My first payment was 10% which was upon completion of the foundation. I don't have my contract w/me but I think the next on is either 15 or 20 it is when the windows are installed.
If you want the exact numbers I have, let me knwo and I will look at my contract tonite.

Many states have guidelines set up their home improvement liscenses for payment draws. For the person that stated that the general contractor shouldn't get any of his/her take until the project is completely done, do you only get paid once a year or years? People get what you pay for, when you price shop for the lowest price instead of a good contractor its going to happen. I can probably guarantee you that many of the people that have had issues with the work done or lack thereof picked the lowest price. My hubby is a contractor whose company has been in business since 1952, when a customer picks the cheapest price they are usually called in to fix the mistakes that were made.