Starting work/jobs without a contract

Jonhilgen

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Dec 26, 2009
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I know the obvious answer to this one, but has any one here done a large (20k+) without a written contract?

The reason I am asking this is because I've been working with a contractor on a large closet job for the past four months.  Not actual cutting of wood, but time designing, meetings, revisions, etc.  This is time I have been tracking, and I have added the requisite amount into my contract price so that I make sure I will recoup the money/time spent.

This closet is a remodel, and before they started tearing down a wall and doing any type of demo, I gave them a wide price range, with the wording that the final price may exceed this range if any changes were made.  Well, substantial changes were made and I passed along the final contract and price the first week of June.  The client balked and "put the job on hold" the following week (June 12th.)  Met with the client and builder on June 18th (massive amount of fireworks during,more on that later).  Held firm on my price, and at end of meeting client agreed with go-ahead.

June 20th, called builder to confirm that we are a go.  He said we are, but he didn't want to aggravate the homeowner before he went on vacation by sending him a large invoice (client is a large one for builder, yearly property management).

I get a call from the builder last Friday (27th) and he asked me when I will be delivering cabinets.  I tell him my standard lead time, that I have been firmly communicating throughout this entire project.  He flips out and wants to know why I don't have the majority of this job built!  "We gave you the to ahead over a month ago." My response was that to this day I don't have a contract, and I cannot build cabinets when major changes were made late in the game, and that the spec house they are building is first in line, then closet will be built.  That could change if I could get an update on spec house schedule, then I may be able switch them to bring it in earlier.  He said this was unacceptable and that he would call his boss (when I said builder earlier on, I meant the superintendent for the builder.)  

As of today, still no word on contract (sent an email yesterday asking them to sign), and no word on spec house schedule (under contract and I have a deposit).

I just cannot wrap my head around this.  There's no way I could put myself out there, commit a lot of money without a contract.  That's a sure way to kill my business.  This is a very wealthy client, and yes, they have already started demo a while ago. Showing they are serious about the job, but I don't have a contract!  Am I being a stick in the mud?
 
Showing they are serious about the job, but I don't have a contract!  Am I being a stick in the mud?

No, you are wise and I might suggest you receive a down payment

when you pick up your signed contract.
 
Agree that BOTH a contract and a deposit are in order!

I don't know what's customary on a job like this, but when I did computer/networking build-outs I required a 50% deposit before beginning the job.
 
You've shown commitment thus far with the meeting and time spent.  It's their time to show some commitment by signing the contract and getting a deposit.
 
Hold firm.  I work with alot of design shops and fabricators, and not one of them commits ANY resources without a substantial deposit (let alone contact).

I would even suggest that after an initial "meet and greet" sales meeting with the clients and GC, a design fee should be required, (which would be credited to the job cost when the job is awarded)  to move the design process forward. This helps ensure that your not providing free designs for another installer.
 
Jon Hilgenberg said:
I know the obvious answer to this one, but has any one here done a large (20k+) without a written contract?

Yes and no. Mostly no but my contract is a letter. Every project and client for me is different. If I do work with a contractor, I get the estimate signed and don't start until I receive a down payment.
For homeowners that I have worked for previously and are smaller projects < $1800.00 I usually wave the down payment with an email approving the estimate. I bill and get payed upon completion.

Jon Hilgenberg said:
The reason I am asking this is because I've been working with a contractor on a large closet job for the past four months.  Not actual cutting of wood, but time designing, meetings, revisions, etc.  This is time I have been tracking, and I have added the requisite amount into my contract price so that I make sure I will recoup the money/time spent.

When working with a contractor I ask for a down payment based on an estimate before starting the design etc. Any change is noted and a change order is submitted. Failure to comply with the payment schedule, and I stop work.
Consequently I don't work with contractors very much.

Jon Hilgenberg said:
Held firm on my price, and at end of meeting client agreed with go-ahead.
It's really confusing, who is supposed to pay you here. The contractor or the home owner?
No down payment no go-ahead.
If the contractor is, I could care less what the homeowner has to say about schedule.

Jon Hilgenberg said:
June 20th, called builder to confirm that we are a go.  He said we are, but he didn't want to aggravate the homeowner before he went on vacation by sending him a large invoice (client is a large one for builder, yearly property management).

Hmmm, this is not a good sign. He has to present him with an invoice at some point, does he think a larger one later is gonna be easier to swallow...

Jon Hilgenberg said:
He flips out and wants to know why I don't have the majority of this job built!  

He's an idiot and is not managing the project, his boss and/or the client. This is a bad sign.

Jon Hilgenberg said:
As of today, still no word on contract (sent an email yesterday asking them to sign), and no word on spec house schedule (under contract and I have a deposit).

Sounds like the spec house is taken care of contractually. Because your contractor can't get his s**t together is not your problem. You got your contract and down payment.
Get the "who's paying me for the closet project" sorted out and signed off on paper. Treat both projects, the closet and spec build like they are for completely different clients.

Jon Hilgenberg said:
This is a very wealthy client, and yes, they have already started demo a while ago. Showing they are serious about the job...

Just because he demoed his closet doesn't necessarily motivate him to pay or move any faster. The pathetic lack of backbone by your contractor isn't helping matters.
Most wealthy clients have a lot of options, such as other residences, cottages, long holidays overseas business travel etc. that enables them to act differently than regular customers.

Tim
 
You already wasted time you probably won't get back.  I don't believe anyone when money is involved, until they prove they can actually write the checks.
 
What would concern me is the middleman in the equation...the contractor/builder. Things are bound to be twisted before they are presented to the client or even his superiors.  What you are describing about how they "handle" the client is a red flag.  Write a nice email summarizing what you have done so far, the hours invested, the last agreed upon revision and each request for a signed contract before you can schedule work and of course the lead time once the signed contract and down payment is received.

That's the way the real world works, this contractor knows it, they are just adding the extra drama to get their way, meanwhile I'll bet their are communicating to the client that the carpenter is pushing back the schedule. If anybody cares to ask for the written statement from you, the full story will be contained within. No misunderstandings.
 
I don't even think about getting started until I have a contract in hand and the deposit check has actually cleared the bank.  OTOH, I have a couple of clients for whom I'll start immediately when agreement is made verbally.  I've done jobs for them for over 30 years now, and have never had a balk of any kind when it comes to materials or final price.  They are exceptions to the "no contract, no deposit, no work" rule. 

 
Tim handled it fully.  It's a good thing your builder isn't dealing with my wife, who handles contracts from a few million up to ones in the lower billions, she'd laugh at this person right out loud with their very misplaced anger.  She also has the luxury of a full legal team to consult with, so she's not on her own at any given time like you seem to be.
No paper and money, no movement on your part.  [mad]
Like others have said, stand firm, and let us know how it turns out.
One last thought, it's a funny one. She can sign contract involving millions or billions and not be worried, yet when I hand her a hundred or two in cash, she practically falls over.  Very strange, I'd be just the opposite with contracts that large in value... [embarassed]
 
I've done plenty of jobs over the years without a contract. In the early days because I was stupid. In later years because it wasn't necessary all the time. That means only for well established clients that I have a working relationship with.
For a developer/contractor NOT a chance in hell. The developer will throw you under the bus, as he already has, and screw you. I'm lucky I don't have to work for developers. They are lucky because they get to stay healthy.
If you can't cut out the developer and deal straight with the client then walk from the job. Eating the time you've already put into it is far less than the time and money it will cost you later. If the client, i.e. homeowner, won't sign a contract and give you a downstroke then walk. No check, no commencement of work its that simple. Anything less than that and you are just running yourself into the ground.
While I've dealt with plenty of rich people who pay without a hassle, I've dealt with more that make getting paid a real time sink. You need a contract that spells out payment arrangements and clearly states that work will stop if payment is not made. Proper contract language tends to cut down on the 'oh can't it wait till next week I have lots of meetings or I forgot my checkbook'.
I grew up the kid of a GC and started working on jobsites when I was 7 or 8. I've had to do a lot over the years to get paid. My tolerance level for someone jerking around like this is too low to be healthy. No contract and check and I don't give a damn how much somebody moans. Their house, their timeline, their deadline so they can have their party with all their friends are not my issue. Pay up or shut up.
On a sidenote, when you get into a deal like this in the future, get a retainer upfront for your design time. Your design and consultation experience are worth money. Every time you show up and discuss the project you are educating the consumer and the moron developer who is trying to steal as much knowledge as he can from you. Figure how many estimated hours you think the initial will take, add a few, and ask for that as a retainer. If the deal gets funky, its easier to walk because you have some money in your pocket. If I have a good feeling about the job I'll give them a portion of the retainer as job credit, usually somewhere between a 1/4 and a 1/3. Makes the client happy, doesn't kill me. I've never had a legit client balk about a retainer. The cheap BS'ers you don't want to work for anyway will balk.
It took me years to figure out I was actually providing two services; contractor and designer/consultant/spec writer, etc. Unfortunately I was only charging for one. Now I charge for both and life is better. So many of us who are used to working with our hands & tools don't realize early enough how valuable our knowledge is and that we should be getting paid for that as well.
If you have other work I would suggest moving on.
 
I learned my lesson about starting work without a contract a while back on a landscaping job.  Managed to recoup most of my materials costs, but it still wound up costing me about a grand in lost time and wages.  I would've lost my shirt, but I sat on two semi trucks worth of oversize landscaping blocks long enough that I was able to sell em off for more than I paid because concrete costs went up.

 
$307,000.00 so far this year without a single contract. Largest single job, 160k.

Finishing the drawings for a 30k kitchen. Never had a written contract with this women, won't have one on this either.

Starting a staircase for a referred customer, her mom is paying for it. The deposit check came last week from New York. I never requested it but that is what has always happened with mom so she sent me 50%.

I work off proposals and hand shakes.

I should probably send the invoice for the wall repair I posted. I've never meet the owners of the home, but they have always paid their invoices within a week.

Tom
 
Update:  builder finally called me and emailed signed contract.  Check is on it's way, will have it after the holiday.

He tried to complain that "We knew the jobs would be ready at the same time, I just wish there was a way to have started this sooner so that we wouldn't be running into this problem." He also wanted to know if there was a way to build both at the same time...(short answer no.)  I told him there was no way to predict that the homeowner would be making substantial last minute changes that had to be accounted for and re-drawn...long story short, August is going to be hairy!  

I know I'm not the best businessman, but I'm also not the dumbest.  Thanks for the input and information, good to know I'm doing some things right, and some things wrong (getting design deposits.  Not the norm down here, but it's going to be my norm from here.)

Tim, you really nailed the contractor.  He's been playing fast and loose this whole time, and I've even warned him that this situation with regards to the schedule could get ugly.  He was quick to brush me off...and he isn't or wasn't communicating my lead times to the client.  Also, the client is paying the contractor, then contractor is paying me.  

Thanks again guys, and will be updating this as the jobs progress.

Jon
 
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