Reasonable.

No way I'd make that deal if I were your contractor. It would say something like "Addition and porch work begin after payment for demolition." Every time I didn't get a payment, work would stop.

It's a little heavy on early payments prior to work being completed, but not bad. Aside from a good faith small deposit to start I try never to pay for work or materials not done or purchased, since said work or materials may never materialize. I also then pay every two weeks or so for work completed rather than waiting for larger chunks of the project to be done. I think a fairly tight pay-as-you-go schedule minimizes risk for both parties.

In California, contractors making improvements to residential properties are not allowed to ask for such a significant down payment before the commencement of work ... it is 10% or $1,000.00, whichever is less. Not sure where you are located or if there are such limitations in place, but it might be good to know. Personally, I'd have a problem parting with $55,000 before construction even begins.

This post was edited by jellytoast on Mon, Nov 17, 14 at 11:10

Open an escrow account, with all payments subject inspection approval.

You're present schedule requires you to finance the construction.

If he is not strong enough to finance his operation, then back away.

I thought it was pretty heavy at the front end too.

$55,000 seems to be the magic number. I think paying relative to the work being completed is safer than evenly paced chunks based on the project total. No doubt in my mind he is putting you on the short end of the stick, without leverage, if there are problems.

Doubt you can change that though, unless as jellytoast stated, there are consumer protection laws around it.

You also have to worry about bankruptcies. Not always apparent on the surface of things.

$110,000 for demo and a foundation is pretty steep, imo.

This post was edited by snookums2 on Mon, Nov 17, 14 at 13:51

IMO, a contract should be fair and equal to both parties. This one seems to favor the contractor, allotting him a significant chunk of change before he has even completed any construction. That protects him. What protects his client? If I really wanted to go with this particular contractor, I would renegotiate the payment schedule so that I wasn't paying so much for "future" work. If a good deal of that $55,000 is intended to go for materials, I'd protect myself along those lines as well.

Which, I am beginning to think from listening to other discussions, he might be needing your money to fund other things/projects. In essence, his clients are floating him loans. Interest-free at that, with a lot of risk attached. This could indicate financial problems, as snooby noted.

At least try to renegotiate to protect yourself. If he won't, you need to make a choice how much risk you want to expose yourself to for this particular company.

There was a seemingly sound company around here that bellied up, a near million in the hole. I'm sure their business partners and clients did not fare too well either. It does happen.

This post was edited by snookums2 on Mon, Nov 17, 14 at 19:58

I just talked to a contractor today. That is standard. He told me it'll be like 10% up front. He said this is for some beginning costs, some materials later in the job they need long lead times on etc. They have costs after each phase (foundation, plumbing, electrical etc). So it's reasonable.

"I just talked to a contractor today. That is standard."

With their hand in your pocket, they'll tell you anything, to get you to keep it there.

Talk to a bank or an escrow.

Standard? Hardly.

That is a very reasonable draw schedule and pretty standard. I'd argue that you will be way ahead (to far imo) towards the end of the project. You should be about 95% complete after inspections and still owe the contractor 68k. Most of the problems, if any, will be towards the end anyway.