Best way to pay your contractor

[Anwar Shabazz]

When you hire a gc and the bid is 50k, how do you pay him so you make sure he doesnt screw you over?

10k  per week? 50 percent down? 50% when he completes the job?  I have always been burnt by these so called pros and I want to make sure I do it the right way this time.

Any advice would help guys.

[Rob Harris]

@Anwar Shabazz - Trying to keep this short as possible; If they have the money to perform you should not have to pay anything up front. If they are a "broke" contractor, they really have nothing for you to obtain if you have to take recourse against them.  Also obtain a standardized contract and add specifics to performance task and exactly how payments will be made.  At each stage make the contractor and EVERY subcontractor sign a "Conditional Lien Release" for each progress payment made.  This way if they try and file a lien after the fact you have easy legal recourse against them and to support the immediate removal of any liens on the property in question. 

I would  I do this until I have a solid history with a contractor.  Once they have proven themselves reliable, I give them a bit more rope.... That's just how "I" work things....

Get all their license, bonding, and insurance information up front and have yourself added as an additionally insured to their policy to cover yourself.

Break the job down into "chunks"....  Each stage of completion must meet inspection standards and again, they receive payment and sign the proper lien release.....  At the end of the job, when final payouts are due... all work, again, must meet muster and then EVERY SINGLE CONTRACTOR on the job must sign an "Unconditional Lien Release" to be paid...... If you don't get one from every single sub as well as the prime contractor, you are leaving yourself open to a problem.... The trigger for lien releases to take affect is when the check is negotiated.  If they cash the check, they have no legal right to file a lien... All the lien releases I have seen have a section to write in any disputed or outstanding payment amounts.

Not, every state works the same, but should have a similar process available to consumers and contractors to have mutual protection from the other.  

Lastly, if you are using a new contractor you have no history with, ask for references.  Ask to view other work he has in progress and then 'make your way' over to the owner during that visit or later to do a simple interview with them to get the real scoop in regards to the contractors performance.  How is he managing resources, payments, problems with inspections, punctuality, etc....  Also check on their license and the licenses of any subcontractor and see if they have had any complaints against them...

Hope some of this helps! - Rob H