Paying Contractors And Subs

If you decide to use a contractor or subcontractor, often referred to as a sub, then you will want to understand how to pay them. Your leverage on them to get the job done and done right is payment and their good name. If they don't have a good name then payment for their work is your only leverage. Hence, you will want to determine before you hire them how you will compensate them for their work.

You must understand the basics of how the laws are written to understand the dynamics of paying a contractor. If a contractor does work on your home and you don't pay them, they can file a lien against the house in order to get payment. They can even foreclose on the house if you refuse to pay them. A lien will also keep you from refinancing or selling the home. Hence, you will want to make sure you cover yourself when you pay your subs and contractors.

If you are using a general contractor to do a remodel, he may bring in specialists to do portions of the work. If you are paying him a set rate for the remodel, he is using your funds to pay the subcontractors. However, it is possible for him to take payment from you and then not pay for the work done by the subcontractor. The subcontractor could then in turn put a lien against your house even though you have already paid for the work done.

You can avoid this issue by paying each subcontractor directly. When you make the contract with the general contractor, you can demand to pay off each sub that works on the house. Then when you make payments to the sub, require that they write a release for the work done before giving them the money. This gives you an opportunity to inspect the work first to make sure the work is up to standard. Now that you have the release, they should not be able to file a lien.

Also, when paying the general contractor, you may want to pay for all of the materials directly too. This prevents the suppliers from filing liens for non-payment. Additionally, you should never pay the entire amount to the contractor up front. What is to keep him from skipping out on you and not completing the work? You should pay him in segments as the work is completed. This will motivate him to keep working and if something does go wrong and he leaves, you are only out a portion of your money and you still have enough funds to hire a new person to finish the remodel.

You will want to screen your contractors and subcontractors before you hire them. If they have a history of poor payment activities then you want to avoid working with them. You will want to ask for references and then check them. Also, inspect the work they have done. If you do your research properly, you shouldn't have to deal with shoddy work and mechanics liens.

Even though you may hire a general contractor to handle all of the day to day worries, you will want to pay close attention to the remodel. Inspect the work periodically and make sure that the work is being performed correctly. If you don't, you may be surprised by a few errors before the work is completed and after the work is completed.

In summary, you will want to work out the details of payments before hiring any work done on your house. When you do pay for the work, you will want to have letters of release signed so that contractors will not be able to enforce liens on the house.

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