Contractor Down Payment

Hello all - we approved a large re-roofing project. A special assessment was levied in order to cover the cost. The vendor's contract has a breakdown of payment terms we agree upon. However, in California by law, a down payment cannot exceed 10% of the project price or $1,000, whichever is less. Since the cost is $365K that would mean a down payment of $1,000. However, is this paid prior to the start of the project? Does this mean they must start construction once the $1,000 is paid? How soon after the project beings can they bill their first installment of $60K?

Thanks for any clarification!!

Max would probably have some good insights to this.

At a minimum, he'll at least have a snarky comment.

If they have done work for you in the past and you are happy with their work, talk to them.
See what they can adjust for a down payment with payments as sections are completed.

I think this was about your HOA previously: Some of us advised you to get your HOA attorney's advice and to have them vet the contract given it's size. Did your Board do that?

I really understand how desperate you and your Board are to handle the roofs. Because the contract is so large, I'd say you really need an HOA attorney to review the contract and put his advice in writing. Is your friend's real estate attorney's "OK" in writing? Even if so, I'm worried for you & your Board.

I don't think you want your MC's attorney to review it or write the new one. As you know it's going to be very tough getting any roofers after these rains that are hitting CA every other day.

I know you asked the property manager to check with its attorney, but try not to do that again-ever. At the end of the day, that attorney's loyalty is to the property manager, not you. You need someone who will look out for you.

Regarding your payments, you know you can put down 10%, which is good, but as you go along, you should pay in increments the work is complete, maybe 20%. Don't make the final payment until after the work is inspected, the work areas have been cleaned up and the subcontractors, if any are released from all liens. In fact, read the contract yourself to ensure there's language that prohibits the contractor from doing that. Otherwise you risk subcontractors coming after you if the main contractor doesn't get paid.