PAYMENT SITUATIONS TO AVOID
Some contractors will suggest unusual payment plans either at the contract stage or once the job has gotten under way. If this happens, the contractor is either dishonest or just a bad businessman. Either way, protect yourself by following this advice: Never pay weekly.
Although the request isn't unusual, demands for weekly payments show that your remodeler does not have the financial wherewithal—or the relationships with subcontractors and suppliers—to support even a typical 30-day billing cycle. Worse, near the end of the job, you will have little leverage. A less-than-reputable contractor who underbid will be tempted to walk off, knowing he's only leaving a week's wages behind. Don't make payments in cash or with checks made out to "cash."
Any remodeler who wants payment in cash is probably trying to avoid paying taxes on income, has a bad relationship with the bank or doesn't have a bank account at all. It should also prompt you to make sure his workers' compensation and liability insurance policies are active. Don't pay earlier than called for in the contract.
A remodeler might come to you claiming he has underestimated material payments or, worse, underbid the job and needs an early progress payment. Hard as it might be, you have to turn him down. If the contract clearly states when payments are due, stick to it. Paying early probably won't help the remodeler anyway, because he'll just be in a deeper hole before the next payment is due. Pay the same person each time.
Your remodeler should have a designated "banker," someone who is the point person for all financial questions and complaints. If one week you pay the carpenter and two weeks later the driver and the drywall foreman after that, the lines of communication aren't clear. You don't know whom to speak to about a real problem, nor do you know who's really authorized to take your check to the bank.
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