Having last payment/retainage put in escarow.

[jmac]

Wondering if anybody has done this before.
Some back ground to story:
We did a site package for new warehouse and after the 95% of the work was done the owner owed me my 10% retainer and a few thousand bucks for completion. I get a call from the project manager and he informs me that they used some extra concrete on the floor poor and they planed on charging me back for the concrete. We both checked grades when I was done and the grades where perfect at the time that I loaded my equipment. The alleged extra concrete used was the same money they owed me so this was a scam to not pay me. I went to take a look at jobsite and in the woods is a 1/2 truck of concrete dumped so extra concrete is bull crap. I have a signed contract and after many letters back and forth this is were I am now. They wanted me to not complete my contract so they could finish themselves and not pay. They even sent me letter saying that I had no intention of completion. I replied that I did have every intention to complete my contract and if they hire another contractor or do it themselves that they would be in breech of contract but I needed a letter saying that I would be paid in full upon completion. Check county records and they have liens against them from other contractors on other work including excavators. Should of checked before starting but will do this next time. They send me letter requesting that I finish work in two days from time of letter, it takes me a day to mobilize so this is impossible. I reply that I will mobilize on Monday and finish by Friday but I need complete payment first before I mobilize direct to my attorney to put in his escrow account and money will not be released to me until I complete work. I also filled out paperwork for lien to go to county on Monday. The escrow thing was my attorneys idea and what I great idea. Now it is up to them, If they don't send money then they have no intentions to pay me and I think a judge will see that way and if they do send money I will complete work as promised and get paid. Any one use this method in the past? If it works I will use in the future for final payments and retainers.

 

[jmac]

Escrow account didn’t work, deadbeat customer. This customer was the first customer to screw me outright from the beginning.
It is one thing to pay slowly but to just not pay and have every intention to do this from the start just pisses me off. Lesson learned. What can you do? Put a lien on the property but that is about it. Not a huge hit to me but stings just the same. Wonder why commercial work cost so much to do? Add 20% to your commercial quotes just to cover possible deadbeats.
I was working on a new house site project today and was paid money due upfront before I started. I am sure that I am not the only one that has had to deal with this.

 

[Steve Frazier]

Sorry to hear that. I can't understand how so many people hire someone to do a job with no intention of paying.

 

[Mike J]

Was this the first time that you worked for them? I remember you saying in another thread that there was someone you got a lot of work from but they pay slow but they always pay. Just wondering if it was them and they decided to not pay?

I was wondering what the most common payment terms are? Like how much do you request up front? Also are you going to have an escarow account for all of the work you do in the future or do you just use that in the even that someone doesn't want to pay the later payments?

 

[jmac]

This was a one time customer. A manufacturer was putting a warehouse addition on this summer. The building was 160 x 60 and the owner hired a project manager that happens to be his father in-law. The payments came direct from the owner. The project manager used a standard contract with progress payments and a retain age. I treated this job like the jobs I do for large GC and didn't demand money up front like I would of done on a residential job. All mistakes on my part and will take credit for being so stupid, but this doesn't excuse the fact of someone just being a thief. The other subs all had the same problems for a lot more money than I.

Residential: 1/2 upfront for jobs under 20k 1/2 at completion.
1/3 upfront for jobs over 20k 1/3 at 1/2 completion and 1/3 at completion. All change orders paid at time of work. No retainer.

Commercial: All depends on the contract. Can be negotiated but no money until you do the work. And yes I would use the escrow account for final payments and retainer still sounds like a good idea to me.