Paying a contractor upfront is never a good idea. With full payment in hand, what leverage do you have if the contractors don’t do a good job or even start the job?
You’ll come across contractors that ask for payment upfront, but they are usually scammers. Contractors shouldn’t need much money upfront if they run a viable business. Find contractors that accept a small payment with the contract and periodic draws throughout the process and only pay the contractor the final payment when you’re 100% satisfied.
Use the following questions to help you decide.
Was The Job Done Right?
Make sure your contract includes the right for a final inspection before you release the final payment. Whether you hire a professional inspector or check the work yourself, compare the job done to the contract’s terms. Did the contractors complete all renovations? Is everything up to your standards?
Are All Subcontractors Paid?
If the general contractor used subcontractors (most do), make sure they’ve been paid along with all materials. If anything remains unpaid and you pay the GC the final payment, you may end up with a mechanic’s lien on your home.
Ask for proof of final payment to all subcontractors and vendors before you release the final payment to avoid a lien.
Does The Final Amount Match The Contracted Price?
If the contractor asks for a higher final payment than you agreed to pay, question it. Did you approve the increase? Does your contract include the ability to increase charges?
Know this going into the project so you don’t end up with a final payment amount you didn’t expect or can’t afford.
Do You Have All Warranties In Writing?
Think about the warranties promised when you signed the contract. Do you have proof of each of them in writing? Don’t release the final payment until you have them in hand and have reviewed them.
Ensure the warranties match what the contractor promised and that you’ve read the fine print. If you have any questions, don’t pay the contractor until you’ve worked it out.
Has The Area Been Cleaned Up?
Make sure you’re 100% satisfied with the outcome of the work including the cleanup. Did the contractors remove all unused materials and tools? Did they put everything back where it belongs? It should look like no one was ever there, minus the new, beautiful renovations.
Pay The Contractor The Final Payment When You’re Satisfied
The bottom line is that you shouldn’t pay the contractor until you’re fully satisfied. Make yourself a checklist and make sure you check each box before releasing the final payment. Once you pay it, there’s no more negotiating or asking the contractor for anything unless you have your warranties in place or you find out they were in direct violation of the contract.
Even then, a resolution may require a court appearance and lengthy legal battle. Instead, hold onto your final payment until you’re 100% sure the job was done right.