Will all of the funds (labor & materials) of a 203k loan goes directly to the contractor?

I provide all the materials for the and also carry workers comp policy.

The city's utilities and/or engineering dept(s) will undoubtedly want them to determine whether the distribution lines are an acceptable size/material and if they were installed according to the engineer’s specs.

Many people try to circumvent handymen limitations (ie, in CA it is $500/project max including both materials and labor, some say 600 not 500) for construction/repair work by treating the handyman as an hourly employee, but it backfires because CA bans just that.Not familiar with WA laws so I digress, but where there's a will there's a way.Note the fundamental difference between employee and independent contractor is if the worker is regularly supervised while at work hour to hour.

CPVC is a rigid material, therefore, when it freezes it will crack.

They are only giving me Material cost not labor. 

He complains for a while about my markup and we joke back and forth, but we end up agreeing on $25K if I will pay for roofing materials and he can have a couple months to close.

This is very clean looking and the material you guys provide is priceless!

There have been 3 occasions where the verbal offers materialized into a property visit and I have made 3 written offers none of which have been accepted.I have done all of this since October 1st, 2014.

And you may not have the money to pay them.From the lenders perspective they don't want to give you money until it is locked into the property via labor and material.