How To Pay Subcontractors
You could be employing from one to two dozen different subcontractors to help build your house. When you pay them, how often you pay them, and how their fees are calculated, varies with each type of subcontractor.
Here’s a guideline of what you can expect in paying subcontractors. This is based on how I do it and what is common in my area.
Equity Built Homes suggests that there is 5 payouts over the course of the process. This means that we are looking to maintain a nice and smooth running schedule. All bills and work completed by the 25th of the month are paid on the 10th of the following month.
You might hear differently from the subs you talk to.
But that doesn’t necessarily mean they’re wrong. A couple of extra phone calls can establish what’s customary in your area.
Terms of payment are something that should be specified in your contract.
Remember that everything is negotiable.
Never, under any circumstances, make a payment in advance of work being done.
You probably won’t hear such a request, but it’s possible you could encounter a sub who will ask for an advance to “buy paint” or “buy a new compressor” or some such nonsense.
I’ve heard both of these, and in both cases I politely declined.
If we hear such a request from a sub you’ve already made a deal with, we terminate the deal. This is a guy we can’t trust.
Equity Built Homes provides the inspections that will dictate the amount of the draw given to each sub. This is a protection for you. We will authorize payments only after they have passed our inspection and timeline. We are here to protect our partnership and your money.
That means complete to your satisfaction. If something isn’t right, get it corrected on the spot and don’t pay in full until it is.
In most cases, the final and ultimate influence you have over a subcontractor is based on the money that you owe him.