jpmom

Question about Design Fee

jpmom
4 years ago

Need some guidance here.

We have been working on a plan to do some kitchen updates. We approached a company in the late fall to handle the cabinet painting. Since then, they have taken somewhat of an ownership role off the project - and while I don't really consider them "designers" — they are moving in that direction and have managed several renos this year. They have had some good ideas and have given us "guidance" through the process. I feel like we have come up with many of the concepts together. I did a lot of research myself, and forwarded them photos, etc.

They have moved beyond just painting - and are getting more into renovations. They have subs (fabricators, tiles guys, cabinet makers etc).

We've gone back and forth 5 or 6 times on the scope of the project. Started out small - then it morphed to something much bigger (replacing counters, modifying cabinetry). Now we've pulled back and are happy where we are. They came out and measured several times.

Never in the process did they mention a design fee. However, I did give them a $1500 non-refundable deposit that "would be applied to the project". She said it was more or less to protect them should we pull out, since they were spending a lot of time on it.

We made final decisions and are super excited with where the project is going. And as soon as my electrician moves/installs a couple of outlets - we are ready to go.

She just emailed me the revised plan, and has included a design fee. This is what she said:

"We have implemented an industry standard fee for design and project management on our kitchen remodeling projects. I have reduced this to $1,500.00 for yours as it wasn’t a standard charge when we initially quoted your project. As you’ve given us $1,500.00, this will cancel out the fee."


I have a problem with this. Do you agree?




Comments (64)

  • jellytoast

    The $1,500 was a deposit to be applied to the work should the project go forward. A $1,500 design fee was added to the scope of the project after the fact.

    jpmom thanked jellytoast
  • rebunky

    Nope. Not flying with me. Nice try, but they cannot change the terms of what they said the $1,500 was for. It was clearly a deposit to be applied to work (forfitted if you walk). They cannot change it into a "design fee" after the fact. That's not right. You might not have signed a contract, but handing them $1,500 and an email stating what it is for is binding enough.

    I think you should still work with them, as it seems they have a wonderful reputation. They are just figuring out how to run this new extra business side managing larger projects. I'm sure if you remind them nicely of your terms by showing them the other email they will apologize and make things right. Let us know what happens.

    jpmom thanked rebunky
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  • jellytoast

    "I think you should still work with them, as it seems they have a wonderful reputation."

    IMO, this kind of thing isn't going to contribute to maintaining that wonderful reputation. Changing the terms after the fact simply because they just figured out that a design fee is standard in the industry is unacceptable.

    jpmom thanked jellytoast
  • Texas_Gem

    No one should be expected to work for free and jpmom wasn't asking them to, hence paying the 1500 retainer. I feel the onus is on the company to clearly state that the 1500 is a designers fee. To add to that point, they should also treat it as such so that the client is allowed to leave with all the specs and hire someone else for the job if s/he decides to.


    My impression, like many others is that this was an honest newbie mistake and there was no malicious intent. However, it is still their mistake and they should honor the original agreement and chalk it up to a learning experience. There is a reason all the pros here say they will give you a rough idea on the project but they won't spend hours giving you a detailed worksheet unless you pay a design fee.


    My husband recently experienced this himself. He works IT for a managed services provider and one of the clients needed to replace a few printers. He spent 4 or 5 hours talking with the customers to determine their exact needs and got them the specs on the printers they need. The wife of the doctor (it's a medical clinic) then decided to research the printers on the internet and found them slightly cheaper than if they bought them through his company.

    He told them they are well within their rights to do that BUT, if they ever request an item again, the company will only give them a quote like "HP printer, 1500" and won't give them the specs. As a colleague of his said, "you aren't paying me $100 an hour to push a button, you are paying me $100 an hour to know which button to push". If he hadn't spent those 4 hours researching the best printer for their needs, he could have spent it fixing other computers and networks and gained the company 1200 in billable hours. An extra 40 dollars per printer is to mitigate the time lost.

    jpmom thanked Texas_Gem
  • PRO
    The Kitchen Place

    Ok. I understand. The email where she first requested the deposit was a $1500 retainer. But then later on they decided to cancel out the $1500 retainer with additional fees you weren't expecting. I agree with rebunky, this isn't right. I hope your meeting goes well.

    jpmom thanked The Kitchen Place
  • rebunky

    Kompy (the kitchen place) is a kitchen designer. If she says this is wrong, trust her professional opinion, it's wrong!

    Oh, and let me just add this. If it all goes really, really badly when you call them out. Extremely nicely of course, I'd ask them with your sweetest voice, "So what is your General Contractors license number again? I think I may call the contractors license board to get their opinion."

    I have a feeling they don't have a GC license the way you are describing.

    jpmom thanked rebunky
  • jpmom

    Thank you - all of you, for your support on this. It gives me the confidence to go into my meeting knowing that this is not acceptable.


    Kitchen Place - I respect your opinion.


    Yes - I also agree this was an honest, "newbie" mistake. I feel bad - but I still shouldn't have to pay for something that they realized after the fact. Four months after the fact.

    Rebunky - good advice. Hopefully, I won't have to go that route; but I'll have that in my back pocket.


    I'm really good in situations like this when I don't have a relationship - like over the phone with an airline, cable company - that sort of thing. Or with a clerk at a retail store…. But when I have a relationship with someone, it's not as easy for me to stand up for myself.


    My family has a seasonal business down the shore in NJ - and I'm trying to think of an example to share with her of how doing this isn't ethical. We rent fishing rods - $12/day with a $20 deposit. I guess it would be like keeping the deposit when they brought back the rod saying, "We changed our policy and we now charge $32 for the day — $12 for the rod and $20 for the hassle of renting it to you".


    My husband always says — say what you have a problem with, and then shut up. Let them respond. Even if there is an awkward silence, don't talk.


    I'll let you know how it goes!

  • Stan B

    Surprises me that a legitimate business would do this much work for a potential client without a contract especially right now where there is a lot of consumer demand for remodeling. A contractor who doesn't run a professional business is always a red flag to me even if they do good work. Contractors who do good work but don't run their business well usually end up working for someone else. Are you sure you want to go with a company that was a painter when you hired them in the late fall but is now a kitchen designer/remodeler?

    jpmom thanked Stan B
  • omelet

    jpmom - I had to comment when I read what your husband advises. My husband gives very similar advice - he says to say what you have a problem with, then give the other party a chance to do the right thing. If they do the right thing on their own, it's a good feeling for everyone. And if they don't, you know you have given them the chance. Good advice. Good luck!

    jpmom thanked omelet
  • jpmom

    Stan - I totally get where you are coming from. When we called them in to do the painting, it was my intention to be the GC. I have an electrician, a tile guy, and we have a great appliance place (ABT) who we have worked with previously.

    When we met the first time, she showed me photos of a job they recently completed and said that they can coordinate the whole thing. (it was a kitchen where they painted, replaced backsplash and countertop) She had her tile guy come over and then gave me an estimate for his work. When we considered doing new counters, she sent me to a local stone place to look at slabs and had her fabricator come out to measure - and then gave me an estimate. All the pricing went through her - not directly from the subs.

    Since I started this process, they have completed several jobs (similar to the scope of mine), and she shared the before and afters with me. Here is one:

    Before

    After:


    Besides the floor and the counters, this is very similar to what we are doing. We are keeping our perimeter counters, which I still like, but changing our island top. New tile, new appliances - new lighting.

    They do excellent work - but I think they have realized that their business has changed and they are good at managing and executing this type of thing themselves. My opinion is that I should be "grandfathered" in. All new clients will now know up front what their design/GC fee is.

  • romy718

    They need to stick to the original agreement. To just tell you they are keeping your $1500 & not applying it to the project, as originally agreed upon, is just wrong. Good luck.

    jpmom thanked romy718
  • practigal

    Since when is the design not part of the project? Unless you came to them with everything that you wanted in order, it had to have been part of the project. That they didn't give you a fully separate line item list at the beginning shows poor business practices but I think you have to be realistic: they did work.

    jpmom thanked practigal
  • Bunny

    I agree with practigal. I don't think it was handled correctly from the start, a design fee should have been very clearly stated. However, I do think it's part of the project. I hope you can resolve this and maintain the project/relationship.

    jpmom thanked Bunny
  • romy718

    I also paid a $1500 retainer fee that was credited to the project & was not considered a separate design fee. It was written in similar language as Jpmom's email & was nonrefundable if we chose not to work with this company. They did our kitchen & the $1500 was credited toward the project.

    jpmom thanked romy718
  • sherri1058

    There is only so much "free work" that a company will/should do to land a job. My cabinetmaker spent a number of hours on our project before I decided to hire him, as did a couple of other companies. I think that is part of the cost of doing business. I received a proposal, including cost and at that point in time I also paid him a $1500 non-refundable retainer fee to continue on with the project. If I walked before the cabinets were started he kept the retainer and if I went ahead it was credited to my project. I would not have expected him to tack on an additional amount for design - that service cost is implied in the overall cost of the cabinets.

    jpmom thanked sherri1058
  • jpmom

    Agree, Sherri. Which is why I gave them $1500, in good faith - so they knew we were serious about moving forward. It was clearly spelled out in her request for this deposit that it would be applied to the cost of the project total. A design fee was never part of the plan.

  • beachem

    Wow the kitchen/design world is a whole different expectation in pay me, pay me.

    I have worked with designers before and paid either retention fee or design fee. I made them clearly specify the scope up front so there's no hurt feelings.

    The rest of the business world doesn't work like how the design world work. I have clients that are $20-150M companies. When they do proposals for jobs, they can spend years and hundreds of man hour on top of expenses to work out the client's project in order to get a chance at the business.

    They and I are judged on are our ability to execute, the design of the project and the details. The details and execution are what matters. A simple mistake can cost the client hundreds of thousands to millions of dollars. We don't give out the details because it has to be figured out and adjusted nonstop throughout the job.

    I don't charge prospective clients a retention fee or for my time on the proposal. Before I even meet with them, I've typically spent several hours researching the info they give me.

    I'm not the cheapest and don't compete on price so I tell them up front before I start any proposals. The costs to work with me are laid out clearly. I also explain what I bring to the table and what the competitors can't compete on.

    I've had people take my ideas and go somewhere else. Half will come back after the work is mangled and they get charged more because now we have to fix the damages. Good lawyers are not cheap at $450/hr and I usually have to bring them in for the fix.

    Many times we can't fix the mistakes. The costs on those mistakes can exceed my fee by thousands of percent.

    I've met with 4 designers on my kitchen. Even with glowing recommendations on Houzz, all except one were subpar on business practices and execution.

    The meetings were so vague and closed off that I wrote them off as a waste of time. They would have been more successful if they had pre screen my preferences first, outline the ideas, explain why certain layouts won't work, set out the estimated cost, and tell me to pay them a flat fee for their time if I wanted to keep their rough drawings.

    In my opinion, an experienced designer could zip through a rough drawing while addressing the homeowner's desires in half an hour. Charge them a flat fee of $250 or $500 if they want to keep the drawings.

    Worst case is that they take the drawing and go elsewhere but you got paid for your time.

    jpmom thanked beachem
  • homechef59

    You won't know the answer until you sit down face to face to hash this out. In my view, it's about 50/50 on responsibility. Part of your job as a client is to ask the hard questions. What services the $1,500 retainer encompassed was one of those questions. You should have asked about that in greater detail before your got out your checkbook.

    When I GC'd my recent kitchen renovation, I discovered very quickly that myself and my carpenter hadn't covered everything that was needed in the contract. He would need to do a few unspecified items. It was two or three days of extra work. If I needed it done, we needed to amend the contract. It was about 50/50 who had dropped the ball. I was a little pissed about it. But, I had to swallow my pride and pay him more to complete the job. I didn't expect him to work for free for two or three extra days. It wasn't in the contract so I needed to pay up.

    Design fees are only one element to the project. It is entirely reasonable to charge for design. These people have provided you with design work, access to their subs and have taken their time and expertise to get you to a point where the job can start. They deserve to get paid for their effort. $1,500 isn't out of line for design services.

    While it wasn't in writing, they have worked for you. Do the right thing and pay them for the effort. But, be sure to tell them that the process was vague and you feel a little blind-sided by their process. You understand that they are learning, too. Ask them to accommodate you in some other area to make up a little for the mutual misunderstanding. If they are serious about being in business for the long run, they will try to meet you more than half way.

    jpmom thanked homechef59
  • cpartist

    Sorry I disagree with you 100% homechef.

    It was very clear in the email that the fee was for the work done and if jp wanted to move forward with anymore work done, then she would have to pay a $1500 fee which would not be returned if JP decided to not use this company. It was clearly stated that the fee would be absorbed into the job if JP moved forward with the company, so please explain why JP should have to pay additionally after the fact?

    I am a full time artist. It would be like me giving a customer a price to do a floral drawing, asking for a retainer fee and then once the drawing was done coming back to the customer and saying to him/her, "Um sorry but this drawing took me 5 hours more than I expected so you need to pay me an additional $250." If I miscalculated, that's my mistake and I have to eat it. And hopefully the next time the customer wants another floral or a friend sees the customer's floral in her apartment, I'll be called to create a new one. Then I can price it properly.

    jpmom thanked cpartist
  • Bunny

    I had a KD for my very modest kitchen facelift project. I'd had no experience using a designer before and wasn't sure I could afford one. Actually, I wasn't even sure I could afford to have the kitchen redone. At our first meeting it became clear to me that I could indeed afford to update my kitchen. Whew! Then I asked her, what about your fee? She smiled and told me that she didn't charge a set fee, but got a percentage of the cost of items I bought through her (e.g., doors, counters, sink, faucet, etc.). I thought the quotes were very fair and hope she was able to take a good chunk out of that for herself.

    I'm on my own so I have to do all the thinking in my house. :) I gotta ask these questions up front.

    jpmom thanked Bunny
  • rebunky

    Hi jpmom,

    Your situation has been in the back of my mind all day. I was just talking to my husband (he's a GC) about your situation. I am not really aware of how these design/build companies work, so I apologize if I'm not understanding this correctly. But he did think you could be looking at a big headache if things go bad and they do not have the proper license.

    I worry because you mentioned that this was a painting company, but just recently have expanded the business, doing the entire remoldel. You are one of the first customers under their new business model. Included now is also a "designer" who charges a flat fee and manages the whole project. The designer "fee" they sprung on you after you paid a retainer fee to be applied to work. You will sign a contract with them and pay them a set price for the entire job. They in turn will contract with their own subs for work and they will pay them, not you. Do I have that right? Do you know if they have a GC license or not?

    I ask because if you are paying this company for the whole remodel, and they are paying the sub contractors to do certain trades, then they are acting as a GC. They would need a license that covers all those trades. If not, they should not be charging you over a certain amount (labor and materials) for any of the trades that they are not licensed for.

    For instance, let's say they only have a painting contractors license. Technically they cannot charge you for tile work above a certain amount because their painting license doesn't cover the scope of tile work. In my state, an unlicensed person can only do work up to $500 per job, including materials. Of course, many don't care and do it anyways. But it is a real risk to both parties, but the homeowner especially.

    For example, what if you paid this company the set amount in your contract for remoldeling your kitchen. But then, for some reason, they won't pay one or two of the sub contractors? What happens? The subs will then come to you and say I want my $. You'll say, but I already paid the "designer/management" company. The sub could actually try and put a lean on your house. You'd have to probably get a lawyer involved and go after the owner of the company. Blah blah blah... it would get ugly.

    Another scenerio is what happens if something is not installed correctly. Let's say it's the countertops. They are a mess, not level, hideous seems, etc...I see threads on this site almost daily regarding nightmare installs like that. You naturally would complain to the company's designer/manager. But what if she says, "Well, we think it looks perfectly fine." What's your recourse if their license doesn't cover that work? You cannot then go after the individual sub who did the crappy job because they will just say to you, "Sorry, but I don't have a contract with you." Again, a big headache for you if they don't have that GC license and liability insurance that covers all the work you are paying for.

    It is fine if they don't have a GC license, and you just want to pay them to run the show. In that case, I think you should contract with and pay the subs yourself. That way you are acting as your own GC as owner/builder.

    Here's an example of how the Big Box stores in our town does this. My husband is the GC for one of the local BB stores. His license covers the subs installing flooring, fences, decks, window/doors, etc... The box store cannot take the customers' money and then hire/pay these sub contractors themselves. They have to have it all go through the GC license. Yes, they do all the leg work, set up with the customer when the sub will be there, and basically run the whole show. My husband doesn't do any of the actual work besides a little paperwork. They collect the customers money, they then send him a check, he takes a percentage for maintaining the license and liability insurance, and then he pays the sub contractor. So I guess what I'm saying is, I think most of these design build companies probably need to have a GC on board. Hopefully this company does and I'm freaking you out for no reason! I sincerely apologize if I am way off base.

    I am sure everything will go smoothly. I just felt like I should bring these issues up to you, just in case. Better safe then sorry right?

    I hope it all works out well. I look forward to seeing your new kitchen reveal one day.

    jpmom thanked rebunky
  • jpmom

    Homechef:

    The $1,500 was a good faith deposit, showing our commitment to the project, that would be deducted from the project total.

    Nothing more, nothing less.

    Never a mention of design or GC fee.

    Did they spend time on the project? Of course. Were there ways for them to make up for this? — add a percentage to the tile work, cabinet modifications - even their painting estimate? Sure. If they didn't do that, is that my problem?

    Cpartist's example is an excellent one. You simply can't add this fee at the end. They need to chalk this up to their inexperience with regard to coordinating projects. They've been in the painting business for 30+ years. The gal took the business over from her father last year. My take on this is that they have been brought in as the painting contractors on countless kitchen reno's. They've seen the kitchen transformations that they've been part of (with regard to tile, counters, etc.) They have a couple of trusted contractors they've met along the way and realized that this is something that they can offer to customers.

    When I first met with them, I was only getting a quote for painting. I had every intention of acting as GC and bringing in my own people When I explained what I wanted to do (new backsplash, some cabinet modifications, new hardware, etc) she immediately said that they could coordinate the whole thing. I thought, "great — less for me to do on my end." (I am using my own electrician - as he is a gem) Then and there, she should have said that her fee to do this is $______. The second opportunity for this was when she submitted the first proposal. Again, nothing.

    Do I feel bad that they neglected to account for this? Sure. Rookie mistake. Do I feel like I should cough up the money now? Sorry - but no.

    Rebunky - it's an interesting situation. When I was considering new countertops, her fabricators pricing was higher than I anticipated. I told her I'd like to get my own quote from the granite guys who did our basement and she had no problem with this. In her revised quote the other day, there was an increase in the tile work b/c I added an additional area for the backsplash (a side wall of tile). I felt that the increase was high and asked for her tile guy to look at it again. I also asked her if I could have my tile guy (from our basement remodel) quote it - and again, no problem.

    They are expert painters - and I have no doubt that they will do an excellent job on that part.

    The lines are kind of blurred, however, on managing the project. I handled my appliances and dealt with that company for the measure and install. I came up with the plan for cabinet modifications based on feedback here on GW. Now, I may be dealing with my tile guy. It's kind of like we are managing this together. I appreciate your insight and sharing your husband's experience. I'm really not worried about her company. Her reputation is on the line - and they have a lot to lose if they screw something up. (she has already shared a couple of stories about a stone fabricator who messed up on a customer's quarts install. She had to chase him down and get him to make good on the project. I could tell her frustration since I'm sure it took a lot of time on her part.) I think all these situations have caused them to take a step back and reasses their business. Therefore, now they are charging a design/GC fee to NEW customers. And rightly so.

    If I can rearrange my schedule, I will meet with her today.

  • Stan B

    You should have been grandfathered. Again, the fact that you weren't means 1) they don't know what they are doing; 2) they actually do know what they are doing and are hoping you go with someone else (e.g. they don't want the job). Either way, I'd be thinking about these warning signs even though you already have $1500 sunk costs.

    jpmom thanked Stan B
  • jpmom

    Stan -

    I have no doubt that they know what they are doing. They just realized that they've been under charging for their services. Rookie mistake. There is a steep learning curve - and I don't think they anticipated the amount of time it takes to go through the process - from start to finish.

    We are all super excited about the project - and I can't wait to get started. I'm confident we'll work through this. They are good people - and my instincts are usually spot on. I don't smell a rat here. However, I think it was poor judgement on their part to slap this fee on at the end.

  • sjhockeyfan325

    The issues rebunky raises with respect to payment of subs happen all the time with licensed GCs too. People are getting off course here. The fact is they added a $1500 charge after the fact, and have no right to do that.

    jpmom thanked sjhockeyfan325
  • homechef59

    I continue to advise that you need a face to face meeting. You won't know until you talk to them. You may discover that they are willing to eat this fee. They may try to accommodate you in some way that will be mutually satisfactory. They may tell you to pound sand. No one will know until you meet with them.

    I'm just a homeowner with a lot of renovation experience. No one wants to spend money needlessly, no one wants to feel ripped off and nothing is free.

    jpmom thanked homechef59
  • practigal

    I'm sorry. I would expect the deposit to be applied to the design fee.....

    jpmom thanked practigal
  • jpmom

    We will meet - hopefully today. I'm confident we will work this out. I'm not stingy, by any means. I can go on an on - but the bottom line is that this fee never, ever came up - at any time - in the last four months. There are so many examples, such as cpartists that one can come up with to illustrate just how inappropriate it is to charge me this now.

    My husband deals with consultants on a daily basis who bid for jobs. They know the time they will spend and price accordingly. He just approved and signed off on a $200,000 job. Should the consultant spend more time than he anticipated, too bad. If he spends less time than he estimated, well, the $200,000 is still his.



  • beachem

    @jpmom you just explained the problem right there. The owner retired and an inexperienced person took over and have taken on more than they can handle.

    You are basing your expected outcome on the work of the father. You may not be even getting the crew that has made the father's company into a success with a great reputation.

    You need to regard the daughter and the company now on its own without any rosy glasses and without looking at its reputation.

    @rebunky have brought up good issues that you need to address in your meeting on top of the last minute fee change.

    In my professional experience, family transitions have usually failed spectacularly ranging from bankruptcy to losing the company when all the employees deserted to the competition. Only about 10% actually survive.

    Every time you add an anecdote, red flags start going up for me based on 30 yrs of advising privately owned businesses. Execution and details will be her Waterloo here. You already are one of the guinea pigs.

    Ask for referral to the most recent clients i.e. Last couple of months, especially the ones that she said had trouble. Did they get the issues resolved to their satisfaction.

    Just because she is a good person does not mean that she won't turn on you or fail to deliver. They have nothing to do with being a good person. Ability to deliver beyond the scope of what the company has done previously is not based on her good heart.

    Money stresses change people. I've had long time, trusted clients suddenly lie like pros because they thought they could blame money losses on me.

    She's new to business and has already turned on you by dumping her inexperienced mistake on you. I would advise documenting everything in writing from here on in especially in email recounting verbal commitments and face to face meetings.

    I hope all goes well til the end of your remodel but if not, you will have documentation to protect you against she said, she said.

  • mayflowers

    They are trying to compensate for the loss of the counter and tile mark-up. The design fee never came up until you removed those two items from your project. My brother-in-law is a plumber, and when he provides plumbing fixtures and other materials the homeowners could buy themselves, he marks it up. He calls his materials mark-up "gravy" and has lived well off that gravy.

  • jellytoast

    If she doesn't budge on this extra fee, you are stuck between a rock and a hard place. You are either out the $1,500 and the time that YOU also wasted in your dealings thus far if you walk away, or you are stuck paying the extra fee she tacked on and are also stuck with finishing the job with someone who conducts business this way. Lose lose.

  • jpmom

    I'm confident we will make this work.

    Thank you for all of the feedback and advice. Will let you know how it goes!

  • rebunky

    Jpmom,

    You sound like a very smart person. From what you are saying, it sounds like this company has an excellent reputation and has run a very successful family Painting business for over 30 years. Congrats to them that they are now expanding the business into general contracting with the next generation.

    I'm sure that someone associated with the business by this point has the proper class B-General Building Contractors license. Maybe Rob or Steve? It could even be the retired father. He might have retired from running the business, but is keeping his license active and any other requirements for the business to continue. It could even be the daughter. A woman can be a contractor too!

    All I'm saying is, you really should make sure for your protection whether or not they are properly licensed, bonded and insured. I worry only because they are making such novice business mistakes and are new to anything but painting.

    All I know is that it would be extremely stupid of them to start taking on jobs, outside of painting, without that B license. They could get in big trouble if the state license board found out they are contracting w/o a license. They could get fined and whatever license suspended or revoked. So I'm sure by now they have all they need legally to operate. I'm sure it is all fine. It's just that I have not heard a straight yes or no from you if they are indeed under a GC now.

    One thing I know is that my husband is legally required to have his lic. # on all advertising, business cards, contracts, etc... All you have to do is find that number and look it up online in your states' contractor license board database. If you do not see a lic# on the contract that's a big red flag. In that case, you should ask them directly for it.

    If you look it up and find out that all they have is the specialty trade class C-painting and decorating license, from what I understand that is not enough for what they are doing now.

    sjhockkeyfan, yes I did veer of the road from the original issue regarding the design fee to address something I saw as potentially being a much bigger issue. You are correct that there are bad GC's out there who can do shady things, not pay subs, not complete jobs, do shoddy work, the list goes on. However, at least with a licensed GC you have more recourse.

    One huge recourse is that a GC must have a bond. Bonding protects the homeowner if the contractor fails to complete the job, does substandard work covering them or anyone they hire, fails to pay financial obligations like paying the subcontractors, permit fees, or supplies/materials. It even covers if the subs or any other workers he brings in damages your property somehow.

    Liability insurance is also required. It covers if he damages your property, but does not necessarily cover if him, the crew, or the subs just does some shoddy work. That's where the bond comes in as important. Workers comp is also required on any employees.

    Another recourse that you have is you can file a complaint with your states licensing board. That's why I suggested you could mention you may call the license board to get info on that fee issue, just in case they tried to play hard ball. Trust me, they would not want the board to hear a complaint from a customer when their new business venture has barely hit the ground. You would probably get your $1,500 in your hand right then and there.

    So it's simple. If they have the B license, your good. If they don't, well that's your business how you want to proceed.

    Ok, I won't beat this poor horse anymore. :-)

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  • jpmom

    Update:

    I talked things over with my husband before I met with our kitchen people — for sake of this post, I'm going to call her "G"

    DH agreed that adding the fee now was not right. However, he knows how much I've enjoyed working with G. (DH is pretty much hands off. I give him updates, and he occasionally has opinions and input. But I'm pretty much driving this reno)

    DH suggested we come up with a compromise. He doesn't want this to be a road block - or negatively affect how the project proceeds with regard to our relationship with G.

    I met with G on Friday and she explained that they are barely making a profit on our project. She noted that she has spent a lot of time on our kitchen (which is true) and she felt that she had to include the fee on the final proposal. She was pretty adamant about it, and her explanation was fair. I asked her if we didn't agree to pay it, would she walk away from the job. She didn't say yes or no - but she did say that she would be willing to drop it to $1,000. I said I would talk to DH and we would get back to her.

    For anyone who wants to read it, here is the email I sent:

    I decided to talk to "DH" about the final proposal and added design fee.

    As I predicted, he doesn’t feel it’s right to add this fee now. The $1500 deposit was requested as a “safeguard” for you to continue to invest more time. Never was there a mention of a design or project management fee. I looked back at the initial proposals and email exchanges and those terms never came up. The non-refundable deposit was simply to show a commitment on our end. I had absolutely no problem with this - and didn’t even ask for a contract or signed agreement since I felt 100% comfortable with the transaction. It’s hard for us to accept that now you are changing the terms of what you said the $1500 was for.

    I went back through my files to look at our basement project. Brad listed all of the estimated fees — electric, lumber, tile, windows, drywall etc. — and also had a line item for his "GC Overhead/Taxes/Insurance/Profit”. He didn’t mark things up, as far as his subs were concerned. In fact, I saw all invoices, was billed by them directly and wrote separate checks to all. (This is just his way of costing out the job - I’ve also worked with GCs who add a percentage to their sub’s jobs to earn their profit). The point here is — it was all clearly spelled out from day one. We knew up front what the fees were and there were no surprises.

    Essentially, it comes down to a mistake on your part, for not anticipating the time involved with your kitchen remodeling projects. (Which you have since realized.) It’s hard for us to justify paying for an oversight on your end, just as we are about to start the job. And while I appreciate and understand your explanation yesterday of why you felt it necessary to charge us this fee now, I hope that you can see where we are coming from.

    Having said that, we want to move forward and not let any of this leave a bad taste for either of us. We want to feel good about the project before, during and after — and I want you to feel good about working with us! After talking it over, we are willing to meet you half way at $750. We feel this is a fair compromise, given the circumstances - and hope you do too.

    So - we are splitting the difference. I heard back from her this morning and she is good with this and very appreciative. We will move forward, and I'm confident that the end result will be an awesome kitchen update.

    I didn't ask her about a GC license - just didn't want to go there. After the project is finished, I plan to bring it up. If she doesn't have one, I'll suggest that she should consider it, given that she is expanding her business in this direction.

    Again, thank you all for weighing in.

  • romy718

    A very well written response. I'm glad it worked out and you can move on without hard feelings.

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  • ILoveRed

    Jpmom...well done.

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  • Patti

    Classy response. This end of the business is new for her, and she's got a learning curve.

    jpmom thanked Patti
  • sjhockeyfan325

    Well done, and I'm sure the kitchen will be great. Hope everything goes smoothly from here on out.

    jpmom thanked sjhockeyfan325
  • cpartist

    Well done response and a great compromise.

    HOWEVER, I would not wait until after the job is finished to ask about the GC license. Why? Because if there is a problem and she doesn't have a license, you're basically up the creek without a paddle. If she has the license and anything goes south, you'll have recourse. Please, please don't chance it. I agree with rebunky 100% on this one issue.

    jpmom thanked cpartist
  • jpmom

    cpartist- point well taken. I'll be with her a lot the next month or so - so there will be plenty of opportunities to bring it up. I will definitely do this.


    Thanks for the push!

  • beachem

    She's already over her head and making mistakes that is hitting her company financially as I suggested above.

    I agree with rebunky that you get confirmation of that license. As she continues to make mistakes, what happens if she doesn't pay the subs? It will be on you.

    Also ask yourself this. How much time did she actually spend on design including actual time meeting with you on design. Don't count time with subs or at slab yards or anything else that's part of a business.

    Let's say it's 4 hours at the reduced rate of $750. That's a billing of $188/ hr which is equivalent to a top tier law firm. How about 10 hrs. That's still $75/hr. With no prior experience or training, I think she's way over billing.

  • jellytoast

    I don't understand the hesitation about asking a professional a professional question! If this information isn't readily available on their website or even on their business card, why not "go there"? A professional will not even blink an eye at a question concerning their qualifications. If you don't care if she has a license, that's another thing, and in that case, no point asking if the answer doesn't make a difference to you.

  • smm5525

    A top tier law firm doesn't bill out at $188 an hr. Well, maybe for their paralegals, lol!

    She probably put in a lot of time hoping to get a mark up. When you scaled back, she lost out. In any event, glad you worked it out.

  • jpmom

    Beachem

    We first met in November. She came to our house at least 8 times to measure and meet on design. I've been to her showroom twice. The scope of the project changed several times - from small - to large - and now to medium. Based on our emails back and forth, the time spent at our house, the computer mock-ups she provided me with - I calculated that she probably spent about 12-14 hours in total, conservatively.


    Jelly - quite frankly, I'm not sure if I care if she has a license. I'm using my own electrician. I'm using a highly regarded appliance company (ABT - in Chicago area) - who I've used several times before. We are going with my tile guy. G is doing the painting as well as bringing in the counter fabricator who I have checked out on BBB, Houzz and Angie's List. I feel like I have my bases covered.


    smm - I think you're right.


    I'm at a good place now. And feel we've reached fair compromise.




  • smm5525

    I love ABT!!

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  • smm5525

    Are you paying all your guys directly?

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  • jpmom

    Yes - ABT & Electrical and tile.

    I love ABT too. Awesome customer service and excellent installers.

  • rebunky

    You did an excellent job with that email and I think the compromise was the best thing you could do to keep a good working relationship.

    Good news! I looked it up and apparently, Illinois is one state that you don't need a state license to become a GC. Can you believe that? Seems that only roofers and plumbers are required to hold a state license.

    From what I read, all anyone has to do to be a GC in your state is fill out an application form with the city/county, pay a licensing fee, get some insurance, and you are a GC. There is no test you have to pass, no proving years of building experience. Nothing. That's kinda scary to me, but I promise not to go off on that tangent. Haha!

    I had no idea where you were located before, and since most states have very strict requirements, that's why I was concerned for you. But since learning your states is an exception, I feel better that this company is legit.

    I need to learn to ask more questions before I flap my big mouth. I apologize and I look forward to seeing your gorgeous kitchen reveal!

    jpmom thanked rebunky
  • romy718

    Another lover of ABT!

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  • jpmom

    Rebunky - I appreciate the research! That is very good info. Interesting that IL doesn't require much. Actually, that's kind of scary! (I'm not worried about my situation, but there are a lot of shyster's out there who take advantage)

    My guys attached a copy of their insurance policy with the proposal, so I'm good there.

    I will be posting this week; as I have a couple questions relating to cabinet paint.

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