Replies

1. 
   jimblodgett | Jun 12, 2008 05:36pm | #1

   I don't know what "joint checks" are, but the subs should be paid by whoever they answer to.  If you are the GC, you pay them.  That leaves a clear line of responsibility - subs answer to the GC, GC answers to customer.  At least that's the way I like to operate.

    

2. 
   Jim_Allen | Jun 12, 2008 05:37pm | #2

   It sounds like you have entered into a cost plus fixed fee or a cost plus contract. They want to see every dollar being spent. The owner wants to be the signer on the checks to prevent any trickery.

   You both go to a bank and set up the account so that no check is good without both signatures. The owner keeps filling up the account and you both sign the checks when payments are made.

   Bob's next test date: 12/10/07

1. 
   badarse | Jun 13, 2008 02:31am | #7

   The contract is fixed price with material allowances  for flooring, light fixtures etc.  It kinda messes things up cuz If all goes right there will be a good chunk of profit that is now suddenly exposed to the home owner if he's writing all the checks.  I deserve to make a profit and I'm not trying to be sneaky about it ,but don't feel he needs to know exactly how much. 

1. 
   Jim_Allen | Jun 13, 2008 03:00am | #8

   Okay...so you've entered into a fixed fee contract. Now the archy is suggesting a payment scheme that is more consistent with a different type of contract. It doesn't sound like the contract is inked or all these details would be spelled out. Think about what Mike is saying. I took his advice and write all contracts with the draw schedule based on starting something. For instance, today, we started some wood flooring and the draw payment was due. We still aren't finished with the other substantial remodeling in the house but we did start the flooring. The issue isn't "the drywall isn't finished yet...." I don't have to schedule things out of order to get the draw I need to stay ahead of the game. I'd be suggesting a different form of security for this homeowner. I'd offer to set up the contract in a title escrow account and do a draw system just like a construction loan. The buyer wants security. Find a way to give him that. He's spending 300k with you and if you have to pay a title company a few bucks to ease your client's fears, it is still worth it. Remember to add the title company money into the bid and make your markup on it. Isn't life great...you get to profit on your client's need for security! Bob's next test date: 12/10/07

1. 
   badarse | Jun 13, 2008 03:27am | #9

   Correct.  THe contract has not been signed, final meeting next week with owner and architect.  I will resist the joint checks and offer numerous landmark draws with lien releases from each sub.

1. 
   bobl | Jun 13, 2008 03:30am | #10

   is i clear in your contract what the role of the archy is? 

   bobl          Volo, non valeo

   Baloney detecter    WFR

   "But when you're a kibbutzer and have no responsibility to decide the facts and apply the law, you can reach any conclusion you want because it doesn't matter." SHG

2. 
   Robrehm | Jun 13, 2008 03:54am | #11

   It sounds like the archy is confusing public commercial work with private residential. WHat did your contract specify? If you don't have it in your contract to accept pay that way....I woulnd't agree to it.  It sounds like the archy wants to power trip & that will spell nothing but trouble. Personally I would walk away if that's how they want to do things. You have a fixed price already signed. For selections is there a standard (moen model X for kitchen sink or equall) to work from? you could wind up in a big fight about selections that will put you in the poor house if you aren't careful"this dog may be old but he ain't cold. And he still knows how to bury a bone."

   Lattimore

3. 
   dovetail97128 | Jun 13, 2008 04:06am | #12

   It is always a possibility that the Architect has been retained in the manner of a project manager, or in some position that he is being paid to give his best advice and to handle some of these issues.
   I have run into that during my career. I have had architects be responsible for verifying that the work being billed for is in fact done according to specs, I have had them actually be the one to sign off on draw requests before as well.

   They can't get your Goat if you don't tell them where it is hidden.

4. 
   frammer52 | Jun 13, 2008 05:46pm | #13

   me to!

3. 
   bobl | Jun 12, 2008 06:28pm | #3

   "that the homeowner arrange for joint checks for the subs and suppliers."

   I'm going to guess this means the checks will be made out to, for example, badarse and Pa's lumberyard, so you both have to sign the check to cash it.

   I'll also guess this is so the sub gets paid and the HO doesn't get stuck paying twice cause you won't pay your subs and suppliers.

   don't know how the architect thinks you'll get your share or that you are willing to let out our markup info.(assuming fixed price)

   also wonder if the archy knows what a lien waiver is.

   as someone else said, if this is a cost plus or T&M rather than a fixed pricethen that can change things

    

   bobl          Volo, non valeo

   Baloney detecter    WFR

   "But when you're a kibbutzer and have no responsibility to decide the facts and apply the law, you can reach any conclusion you want because it doesn't matter." SHG

1. 
   MikeSmith | Jun 12, 2008 07:47pm | #4

   bad... u gotta give us some more informationbut basically... here's the deal..
   who profits ?.... everything supplied and built into the house becomes the ownerswho's liable ? the contractorset up the payment schedule so you get payments when things START... it removes all the ambiguity about when they're donedon't let the architect run the job.... just because he has a contract with teh owner, doesn't mean he has one with youjoint checks are out... give them lien releases if they want some protection... but you need the control of the purse to control your subs & supplierson $300K i'd have more than 10 payments... maybe 14..
   look for events about every two weeks.. make sure you stay aheada lot depends on the contract ... who wrote it... who controls the purse... what role is the architect performing ?Mike Smith Rhode Island : Design / Build / Repair / Restore

   Edited 6/12/2008 1:05 pm ET by MikeSmith

4. 
   davidmeiland | Jun 12, 2008 10:19pm | #5

   I agree with Jim Blodgett's position but if I had to do it I would do it Jim Allen's way.

   Why isn't the HO willing to pay you based on copies of all vendor and sub invoices?

5. 
   dovetail97128 | Jun 12, 2008 11:42pm | #6

   Yes.

   The check is made out to two parties. Can be You and a sub, or You and a supplier. Both parties signature will be needed on the check in order for it to be deposited or processed.

   I will leave the "Why" this is done , and the "Why" you either want or don't want it done this way to others. I will say it is not an uncommon manner of things to proceed.

   I will say that limiting the manner in which you receive payment based on fear of not receiving it at all or having someone else have some control over how and when it is paid is also a manner of cutting yourself off from work that pays in a timely fashion and with no problem .

   There are any number of GCs for whom payment for subs and suppliers comes from a lending institution that writes checks directly to the sub contractors or suppliers on the premise that the money is the banks until the owners sign loan papers at the close of the project.
   The bank is not going to risk the owners nor the contractors paying the subs and suppliers off.

   They can't get your Goat if you don't tell them where it is hidden.