Uncommon terms in renovation contract? Pls share

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Uncommon terms in renovation contract? Pls share

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Renovation Cost (Budgeting)

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by Tengah Pride

ago

Came across a term in my renovation contract that threw me off. It's about a "progressive payment schedule" with 25% deposit upfront. Followed by 40% and 30% and then a final 5% upon completion.

Is this standard practice? Feels a bit daunting to navigate as a first-timer. Anything else I should be looking out for?

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5 replies to this topic

Answer 1

Progressive payment schedules are pretty standard. It's a way to ensure both you and the contractor are protected. Payments are released as certain parts of the project are completed. Just make sure the milestones and corresponding payments are clearly defined and fair.

However 25% upfront seemed pretty step. Usually its between 10 to 15%. Highest I have seen is also 20%. But each ID company might have their own practice and there isn't a standard tier system. Do conduct more checking on the firm since reno costs are usually hefy.

Answer 2

by Serene C

ago

2

Yeah, got the progressive payments in my contract. Mine is 10%, 50%, 35%, 5%.

Having this tiered payment also give you leverage to hold back payment if work doesn't meet the agreed standards or timelines.

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2

Answer 3

Thanks for the insights guys! Spoke with a friend who recently completed her renovation in our area too. She mentioned it is normal, but also advised checking that the final payment is only due upon satisfactory completion of all work, including settling any defects.

Will speak to more ID too as personally I am not too comfortable with a high upfront payment

Answer 4

Hi TS, It’s crucial to review each milestone in the schedule. The payment terms should correlate to the amount of work done during that period. Some contractors might front-load the payment schedule, which means you pay MORE in the initial stages. You can also try to negotiate a schedule that aligns with the completion of significant works.

Answer 5

Don't worry, the progressive payment schedule you encountered in your renovation contract is actually quite standard practice in the construction industry!

Here's a breakdown of the typical progressive payment schedule:

25% Deposit Upfront: This initial payment secures your spot on the contractor's schedule and covers initial material procurement.

40% at Milestone 1: This payment often occurs when major structural work or rough-ins (electrical, plumbing) are completed. It signifies a significant project advancement.

30% at Milestone 2: This payment usually happens after key installations like flooring, cabinets, and fixtures are done.

5% Final Payment: This final retention is held until project completion and your satisfaction is confirmed. It protects you in case of any minor punch list items or unforeseen issues.

Tips for Navigating a Progressive Payment Schedule:

Review Milestones: Ensure the contract clearly outlines the specific milestones triggering each payment. This provides transparency and avoids confusion.

Hold Retention Wisely: The final 5% retention is your leverage to ensure high-quality work and completion of any agreed-upon punch list items.

Open Communication: Maintain clear communication with your renovation contractor throughout the project. Discuss any concerns or questions you might have regarding the payment schedule or project progress.

Additional Points to Consider:

Change Orders: If any changes arise during the project requiring additional work, ensure any revised costs and payment adjustments are documented through written change orders before proceeding.

Payment Methods: Discuss preferred payment methods (check, bank transfer) upfront to avoid any delays.

By understanding the progressive payment schedule and your rights as a client, you'll be more well-equipped to navigate the renovation process with confidence.