Builder asking for large deposit - how to protect myself

[sidekickdmr]

Ive been shopping around for a builder for ages, and finally found one we really like and seems to really know his stuff.

However he hasn't been trading for too long, a few years at max, and he is asking for a 25% deposit (tens of thousands of pounds), the rest of the payments (25%) at stage payments, so 4 25% payments, last one not till completion and sign off.

Im 100% happy with the 3 25% stage payments, it's the deposit that scares me, he wont be starting work on the build for a couple of months, if he goes bust, or disappears I'm pretty screwed.

Ive been to his house, met his wife, I've seen some of his buildings, so i dont doubt him or think he is scamming me, just scared of loosing the money.

Any way to protect the 25% deposit, if he was to go bust would i ever see a penny?

Ive tried negioating with him, but he said this is how he works and he needs the deposit to start sourcing materials etc

Thanks

[SantaBarbara]

You both need to draw up a contract.

Do they have pro forma contracts available

[Vaud]

sidekickdmr said:

Ive tried negioating with him, but he said this is how he works and he needs the deposit to start sourcing materials etc

A builder with no line of credit for materials?

[barryrs]

I wouldn't even entertain it myself.

I would be happy to pay an agreed amount on a weekly basis via bank transfer however with usual payment terms for labor and materials at 30 days i dont see why he would possibly need so much upfront.

[Vaud]

http://www.ribacontracts.com/

You can get standard contracts here...

Or for smaller projects here:
http://www.sandwell.gov.uk/downloads/file/1038/bui...

(staged with 5% retained)

[sidekickdmr]

This isn't bricks and timber from the local travis perkins, this is a bespoke treehouse build, of which Ive specked most of the materials and finishes to use, think craftsmen, local timbermills, online suppliers of very niche products (hand made copper bathtubs, handmade hardwood windows etc)

[SantaBarbara]

Bespoke Treehouse WOW

[anonymous-user]

What's the total budget. Depending on that, 25% may be acceptable.

[Speed 3]

SantaBarbara said:

You both need to draw up a contract.

Do they have pro forma contracts available

No much protection if he goes into liquidation, happened to a good friend of mine on a large scale extension - fixed price, staged payments etc but he still ended up shelling out again with someone else to get it completed.

Only option I can think of is to pay for the materials yourself (at his trade discount) for delivery to you and pay him a smaller deposit to secure the labour slot.

[barryrs]

Can you pay for the bespoke elements direct?

Being bespoke i can understand the requirement for cash up front from the manufacturer.

[walamai]

Perhaps have a solicitor hold the funds in escrow for you? Builder can call off against them on a mutually agreeable basis. It shouldn't be too hard to draw up a simple process to release the funds. You'll pay for the solicitors time, and probably some handling fees but perhaps worth it for the peace of mind.

[Alucidnation]

He wouldn't be seeing a penny of my money until the materials where on site.

And even then, it would be nowhere near 25% of the cost.

[SantaBarbara]

walamai said:

Perhaps have a solicitor hold the funds in escrow for you? Builder can call off against them on a mutually agreeable basis. It shouldn't be too hard to draw up a simple process to release the funds. You'll pay for the solicitors time, and probably some handling fees but perhaps worth it for the peace of mind.

What if the builder doesn't accept that?

I don't think he will

[anonymous-user]

I can understand your nervousness.

Can't you buy the materials yourself?

[Vaud]

Ahh bespoke - yes - because they won't be refundable/returnable.

Perhaps itemised for the bespoke materials paid by the solicitor directly (deposit and then on delivery?)

For his fee for design/sourcing then separate that out and pay it on completion?

[B17NNS]

Small deposit to secure your build slot is understandable (£1000?). Builders get messed around too.

Then either you order the materials and pay yourself of you pay for them as soon as he has them on site.

[SantaBarbara]

What are his qualifications to do this?

Have you got Planning Permission

[anonymous-user]

SantaBarbara said:

What are his qualifications to do this?

Have you got Planning Permission

There is a very long thread in here about the prep work - it's all very interesting.

[ClaphamGT3]

I would be extremely nervous of any contractor who can't fund the cash flow on the work that they're taking on. If you really want this guy, pay for the materials direct but I would think very carefully whether they have the business resilience to take on a contract of the size that you're asking of them

[SantaBarbara]

It is also about the intellectual input and skill of the person. It is not just about materials