- Construction is not a high profit business, construction projects can be quite large, and contractors can have multiple projects going at a given time. This poses a large cash flow factor for small to medium sized businesses, and since contractors aren’t banks it’s hard for them to wait for thousands or tens of thousands of dollars from multiple clients at once.
- That said you should be prepared and able to pay your contractor the remaining balance at the day of completion. We suggest you schedule a walk around the day of completion to make sure you’re happy and pay your outstanding bill.
- In the case where the project is mostly complete but there are minor touch-ups, it is customary to pay all but a retainer on the project. This helps the contractor keep the business going, and helps you by giving your contractor a reason to come back. Although a professional contractor will come back to do touch-ups regardless of money held back it is good general principal to hold more than enough to finish whatever final items may remain just in case.
- Many professional contractors offer to accept credit card payments or offer sources who can help you finance your project should there be a concern with being able to pay the contractor upon completion for their services rendered.
- Make sure once you have determined that you are happy with your project, it is complete, and you have paid in full, it is important to get a receipt to prove as much.
- It is unknown to most but without a paid in full receipt and lien waiver there is nothing to stop a contractor, or even their supplier (if they are unpaid by the contractor), to place a mechanic’s lien on your house. This is something that applies industry wide to all trades and companies in the contracting industry, so protect yourself.
3) Lien Waivers
- As eluded to above you should make it a practice to receive a lien waiver at completion from any and all of your contractors. Although is a great way for a contractor to make sure they can get paid from a client who is trying to not pay them, it’s not really the kind of exposure you want if you’re good paying customer!
4) Warranties and Coverage
- There are 2 main types of warranties, product warranties and labor warranties, and they should not be confused
- Product warranties cover the product and manufacturing defects and are provided by the manufacturers of the products being installed. Be aware that most projects take multiple manufacturers to get all the parts necessary to complete, and each has their warranties.
- Labor warranties cover the workmanship and provided by your contractor. In the case of a labor warranty it is only as strong as the financial strength and longevity of the contractor that is backing it. What good is 5 year warranty if they are out of business in 18 months?
5) Warranty Exclusions
- Product warranties often have (and should have) strict guidelines on installation of their product in order to maintain warranty. The reason for this is because most issues are, contrary to what you might read on the internet, not caused by the product failing. The issues are caused by the product being installed improperly or in a situation it wasn’t engineered for (like a wood product sitting on the roof or near the ground constantly getting wet).
- This leads to a lot of misplaced online complaints about products and product manufacturers, particularly some of the larger ones who have very strict no cover policy on issues due to installation failures.
- In more extreme cases it’s not uncommon for a manufacturer to deny paying out on a warranty claim even if the issue is product related, because the warranty was instantly voided by improper installation! Yes, that happens all the time!
- In order to protect yourself is extraordinarily important to use a company who is very experienced with the specific products you are having installed, and that they understand those manufacturer’s best installation practices.
- Labor warranties are pretty straight forward they cover install but not the product. Once again these warranties are only as good as the company backing them.