dealing with a Dr. on an upcoming job , but have doubts about his willingness to make the final payment when due.
I’m meeting with him on sat. morning to discuss terms and such. I’m going to ask he put all funds with an escrow agent so he doesn’t have power to fudge around at the completion.
Has any one else used this type of arrangement ? and if so was it satisfactory ?
Thanks in advance, Walter
Replies
Walter,
I've never done it but if I were dealing with a doctor who I didn't trust I wouldn't use the escrow idea without an iron clad agreement written by an attorney who knows contract law very well.
I'd want the payments tied to inspections by someone you can trust to be impartial, the building inspector perhaps.
After thinking about this problem I'm wondering if being asked to do business this way won't offend the doctor, causing him to bad mouth you to others?
If you have evidence that he's stiffed other tradespeople in the past, why not just ask him about those jobs, before you decide if or how you want to do business with him? I suppose that you could also check for liens on his property, to see who's being honest.
I agree...the way you make the request will certainly steer the discussion into the tank or into a mutually acceptable arrangement.
In MI, Frank has taken a hardline because so many builders are paying so slow....or not paying at all. He's now telling them that he wants the full amount of the check written and he'll wait to cash it till he's done. If it bounces, they are criminally liable. He reports that most will not do that. Those are the ones that don't intend to pay. He saves himself a lot of grief that way. The ones that do intend to pay immediately agree.
The approach would be to tell the DR that you are having a lot of trouble staying current because others are slow paying you and you've run out of options. Now, you have to operate on a cash basis....take it or leave it. When an order gets placed, you get a check for the deposit plus your markup. When it comes in, you get a check plus your markup. When you do a week of labor, you get that money, plus your markp upfront as a start check. Basically, you write the contract to stay ahead of the money. When he stops paying, you stop working...according to contract.
At the end, you pick up the balance of your $500 witholding money. If you lose the $500, you can take him to small claims court.
Bob's next test date: 12/10/07
wouldnt the escrow still need the Dr to sign off on the release of funds to you?
Had a friend that had a business deal go bad with money owed to him in escrow, the other party wouldnt release the funds to him and as far as i know that money still sits in escrow. (its been about a year?)
The contract language should create the settlement if there is a dispute. At least the money is escrowed. Bob's next test date: 12/10/07
I guess I've never seen the contract language for escrow, but who decides in a dispute whether to release the funds or not? arbitration?
In my friends case (from what I was told) he could not gain access to the money without the other party agreeing to it, nor could the other party withdraw the funds.