Payment to Contractor

First Payment to Contractor

Step # 44 in the Kitchen Remodel Planner

(Get your own free kitchen remodel planner – click here)

For the homeowner the ideal time to make the first payment is when work has begun. This give you the most control over your money and the project. Paying a big deposit before the project starts sets you up for a situation where you have given a contractor thousands of dollars and they may or may not show up and do the work! Paying for the entire project only at the end of the project is OK for very small projects with just a day or 2 duration. For larger projects paying at the end increases the cost and risk for your contractor which increases the cost to you. so plan on paying at milestones as the project progresses = the first milestone is the first day of work.


Recommended Payment Schedule

The contractors you interview and receive quotes from will likely each propose their prefered structure of payments.  This is a good time to evaluate your contractors business practices.  If the contractors quoting on your project request 20, 30 or even 40% deposit this is not a good sign.  While a big deposit is great for the contractor it puts you at a very dangerous position if for some reason you need to cancel the project because of poor performance by the contractor or other reasons.  California, New Jersey and others states put limits on the deposits a contractor can request and receive.  These limits can be as low as a MAXIMUM of $1000.  States have limited the size of the deposit because of danger to consumers.
For most homeowners this is the best payment schedule for a kitchen remodel.   the goal of this payment plan is keep money flowing from homeowner and contractor in sync with the amount of work that is done so if the project has to end for whatever reason neither party is owed a significant sum of money.

  1. First payment to contractor of 10% when demolition is complete.
  2. Second Payment of 20% after rough framing, rough electrical and rough plumbing is complete and the  work has passed inspection
  3. Third Payment of 20% after insulation, drywall and cabinets are installed
  4. Fourth Payment of 20% after countertop, flooring and backsplash have been installed.
  5. Fifth Payment of 20% when all work is complete and work has passed inspection and punch list of final items is complete
  6. Sixth Payment of 10% 3 days after payment #5 above.  This last payment gives you a few days to check everything out and start moving back in.  You should assume that the contractor will not come back to work on any part of the project or do any further work after you pay this final 10%.  The contractor may offer a warranty and very well may come back to fix items if they need attention but what is best for you and for the contractor is that no other work is ever needed.

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