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Guidelines On Payments And Dealing With Contractors
1. Require your contractors to provide you with itemized bids. Know who will specifically work on your project – they may either be workers or subcontractors. Also, you must have a complete list of material suppliers.
2. Before making any payment, ask for signed and notarized affidavits from the contractor and every employee. Your total payments must be equal to the sum of the affidavits. Also, obtain materialman's certificates. Your payments must have the same total as the certificates as well.
3. Consider making the individual payments yourself. Even if you go for this option, you also have to obtain the affidavits and materialman's certificates.
4. Do not make advance payments for products and services not yet delivered. Do not concede to contractors who demand upfront payments as it can be a very big risk.
5. There are some special order products that require deposits. In such cases, pay the minimum required amount.
6. When your contractor demands additional amounts, it either shows that he is financially weak or implies that he does not trust you. Trust should be mutual – you must expect trust from your contractor as you trust him with constructing your property.
7. Before every payment that you will make, ask your contractor for itemized bills. Check the bills against the amount of work done and the itemized bid that your contractor provided you with at the start of the project. In case you find any inconsistency, find out the problem. Make the payments only after you settle the discrepancy.
8. Avoid paying a big amount of money while the job is in progress. Hold the part of payment equivalent to the unfinished part of the project. If you give advance payment to your contractor, you are giving up on your leverage. You will be left hoping that your contractor will responsibly do his end of the deal.
9. Do not give the complete payment to your contractor if you are not yet satisfied with the outcome. However, be fair and reasonable in doing so. A $100-worth of scratch on a cabinet does not command withholding a $10,000 payment. Deal with your contractor the same way would like him to treat you.