Price agreed to but can't agree to contract terms...what to do?

DaninFLA

Well-known member
Apr 29, 2015
1,011
Sarasota, FL
well novcruisin, good luck, keep us posted and I hope you stick around and maintain your pool the TFP way! you got a lot of good advice here I think,
 

JoyfulNoise

TFP Expert
Platinum Supporter
May 23, 2015
17,445
Tucson, AZ
Pool Size
16000
Surface
Plaster
Chlorine
Salt Water Generator
SWG Type
Pentair Intellichlor IC-40
It has never made sense to me that pool builders get paid prior to work being done. I have to wonder how that started.

I am in new home construction and either the whole project is paid in full at the end (other than a nonrefundable deposit) or payments are made based upon completion of phases.

When I built my pool we bought the kit from a company that later went out of business. When they did there were several people who had paid in full for their kit and never received them. As far as I know they never recouped their money either.
Home construction is completely different. When you build a home you have to prove to a bank and the builder that you are credit-worthy and able to get a mortgage for the amount of the home. There's far greater financial assurances in a home build than in a pool build. Perhaps if all PB's asked for credit/financial checks up from as well as escrow accounts, then they might be willing to do their work with payments structured at the time of completion of each phase. As far as I know from friends who have built pools, not a single PB asked them to prove that they had the funds available.

So I suppose asking for the payment upfront signals to the PB that you have funds the available for each phase. I have had two good friends go through pool builds in the last 18 months and both had to prepay for each phase. Now, in those cases, they did have a 10% retainage at the end but that was agreed upon upfront by the PB and homeowner.
 

grottoguy

LifeTime Supporter
Aug 24, 2014
462
NJ
You need to find out what is custom on your area. When I build by pool this year I added a four or five page rider covering all the issues that were important to me. I did not however address the payment schedule which was similar to yours. I had spoken to a lot of people that had used the builder and was very comfortable that they would fix any problems. And I understood their perspective that homeowners will hold back substantial monies for minor issues. And I understood that they didn't want to take that risk. With home building the banks as lenders have all the leverage and they refuse to make each payment until the home hits a certain threshold. That is why home building is different. But here the banks generally are not involved. Even if a bank lends money to a homeowner to build the pool the bank generally does not care if the pool is ever build because the loan is secured by the house which is sufficient collateral.

If I was a PB I would want terms similar to those offered to you and would be reluctant to accept any deviation. The risk of nonpayment wouldn't be worth it. I do agree that a fair compromise is that any equipment effectively paid for is deposited on your property although that probably adds only a little more comfort.

I would not rule out this builder if you have a number of good references unless you have another builder with simple references that will agree to your terms. Payment schedule is but one of many issues and if you let yourself get hung up over it you may go with another builder and have a host of problems you wouldn't otherwise have.

I would prefer to take the bankruptcy risk and risk of not adequately finishing not the job as long as you have first hand knowledge of satisfied customers. Especially if those terms are not way off market
 

sbcpool

Well-known member
Mar 10, 2015
585
Upland, CA
If I was a PB I would want terms similar to those offered to you and would be reluctant to accept any deviation. The risk of nonpayment wouldn't be worth it.
A good contract specifies what the finished product is (e.g., it will or will not have visible trowel marks, etc.). If a customer doesn't pay and the job meets the terms of the contract, it's pretty easy to secure a judgement against them and attach their property if they won't pay after the judgement. Of course, nobody wants to have to go through this but it's a cost of doing business. I'm willing to bet that demanding money up front drives away more business than the money saved avoiding some problem customers.
 

grottoguy

LifeTime Supporter
Aug 24, 2014
462
NJ
Although attaching a lien isn't inherently difficult, mistakes are often made invalidating the liens. Furthermore, forcing a payment requires litigation ( the attachment of a lien merely secures your ability to eventually get a payment) and is expensive and disruptive to a business. If this builder changed his contract terms on all clients to those requested by the homeowner, he would invariably increase his price by no less than ten percent (maybe fifteen). And I doubt very much this builder is losing much business due to his contractual terms ( most homeowners aren't very savvy and tend to agree to one-sided contractual terms in all avenues of life) unless most builders in his area are more reasonable ( and even then I doubt it affects him much). How many people markup a realtors contract when they are renting or buying or selling an abode. Not many. But those contracts are extremely one sided.
 

sbcpool

Well-known member
Mar 10, 2015
585
Upland, CA
That's why you get a judgement and not a lien. I don't know how other states work, but in California it works basically like this: You secure a judgement in court (small claims if $10,000 or under). If the defendant doesn't pay the judgement, you go back to court and get an order to seize their property. You return to their house with Sheriff's deputies in tow and physically seize enough property to sell and secure your payment (which includes all of your costs of pursuing payment). People usually pay up when it becomes clear that you and the sheriffs are going to take their cars and such.

I find it hard to believe that 10% of any business's customers refuse to pay. But, everyone has a free choice here. You wouldn't ever take a job that didn't pay you before you do the work and I would never hire somebody who wouldn't. I might if I could get them to put in their contract that they had to pay all of their subcontractors before those subs did any work. What's good for the goose is good for the gander.
 

f3justusc

Well-known member
Aug 15, 2012
690
Orlando, FL
We don't anticipate being done in time to swim this year :) and for that reason we were able to talk them into a large discount
That discount may be what is causing the issue. He knows he is not making add much on the job so he needs more up front. Nothing is free deaing with a business so that discount may cost you in another way.
 

JoyfulNoise

TFP Expert
Platinum Supporter
May 23, 2015
17,445
Tucson, AZ
Pool Size
16000
Surface
Plaster
Chlorine
Salt Water Generator
SWG Type
Pentair Intellichlor IC-40
Any chance the OP would consider posting the full details of your pool build? It seems to me that you folks in TX have a higher baseline for pool builds. For $50k+ you can get a really nice pool here in Tucson (two friends of ours have been through pool builds, they both have very nice pools and neither of them paid over $50k)
 

chyvan

Well-known member
Jun 22, 2015
73
Phoenix, AZ
You people with the prepay mindset must live in a different world. Do you guys have jobs where you get paid at the beginning of the pay period rather than 5 days after it's over?
 

Yev

Well-known member
Jul 29, 2014
553
Independence, KY
You people with the prepay mindset must live in a different world. Do you guys have jobs where you get paid at the beginning of the pay period rather than 5 days after it's over?
Dont think that you are better than the prepay people. Your paycheck analogy shows you are the exact same as them, but you hacve never thought about it that way.

Why is it OK for you to wait 5 days for your paycheck. I work 2 weeks, and on day 14, I leave with a paycheck for those 14 days. I am not left hoping my pay comes a week later. For you, you are taking a risk. The company goes bankrupt before you get your last paycheck, and you can easily be out money. You are hoping that you get paid, like a prepay person hopes that they get their goods.

If you have ever in your life bought any good online, then you have prepaid. If you have ever in your life had a subscription to a magazine, you have prepaid. If you have ever bought an extended warranty on anything, including a car or a house, then you have prepaid.

Sure the dollars are less, but the concept is the same. IF a contractor wants to screw you, he will. You can negotiate anything that you want, any type of post payment, terms, deliverable list, etc, but at the end, you can get screwed one way or another. Period. The secret is due diligence and research, and in the end you hope that you end up with a good product.

You can only do your best. It seems as though on this topic, maybe half of the people are able to pay when steps are done, but the rest pay when steps are started. TO me, this sounds like for the OPs answer, try yoru best, but you cant count on getting the terms that you like.
 

Novcruisin

Well-known member
Jun 3, 2015
59
Dallas. TX
Any chance the OP would consider posting the full details of your pool build? It seems to me that you folks in TX have a higher baseline for pool builds. For $50k+ you can get a really nice pool here in Tucson (two friends of ours have been through pool builds, they both have very nice pools and neither of them paid over $50k)
Rough Basics (leaving out a lot of the stuff about PVC, etc.):

15x24 IG Gunite (Rectangle)
#6 bar
Stonescape Mini Pebble Plater
Hayward Equipment - VS pump, 425ft Cartridge, ProLogic P4, Salt Chlorinator, Sharkvac XL
One LED light
Lueders Limestone Coping
450 sq ft of Belgard pavers
6" waterline tile
22x14 Cedar shade structure (integrated into roof with matching shingles)
Stone fireplace with Lueder Limestone caps
Stone retaining wall (10ft) with Lueder Limestone caps
Stone kitchen area with leave out for mini fridge and grill with Lueder Limestone counters
 

JoyfulNoise

TFP Expert
Platinum Supporter
May 23, 2015
17,445
Tucson, AZ
Pool Size
16000
Surface
Plaster
Chlorine
Salt Water Generator
SWG Type
Pentair Intellichlor IC-40
Rough Basics (leaving out a lot of the stuff about PVC, etc.):

15x24 IG Gunite (Rectangle)
#6 bar
Stonescape Mini Pebble Plater
Hayward Equipment - VS pump, 425ft Cartridge, ProLogic P4, Salt Chlorinator, Sharkvac XL
One LED light
Lueders Limestone Coping
450 sq ft of Belgard pavers
6" waterline tile
22x14 Cedar shade structure (integrated into roof with matching shingles)
Stone fireplace with Lueder Limestone caps
Stone retaining wall (10ft) with Lueder Limestone caps
Stone kitchen area with leave out for mini fridge and grill with Lueder Limestone counters
Thank you! I'm sure you didn't want to the post the details because you did not want too far-ranging a discussion but I have to say that your build seems like you're getting quite a variety of "stuff" (pool, roughed outdoor kitchen, ramada, retaining wall, etc) for ~$50k. That's a really good price. Given the complexity of the job, I'm not all that against pre-paying the GC because it would seem, from my limited perspective, that he's going to have to get a lot of materials on-hand/pre-ordered and various subs in place.

I dunno....just my $0.02 opinion but honestly I would haggle about the payment schedule percentages, but not the pre-pay/post-pay terms. All the pool builds I know of in my neck of the woods operate on a pre-pay schedule (with retainage at the end). It seems like a silly thing to haggle over unless there is some glaringly obvious problem with the PB. As I said, if the PB can provide you with a list of references for jobs he's completed as well as give you a list of the subs he plans to use and you call them to investigate, I would think that's enough for me. At the end of the day, it comes down to trust. If you're going to engage this guy in a project that is likely to last anywhere from 60-90days and you're going to uproot your life for that time period, you've gotta come to place where you feel you can trust the guy or else it's just going to be nothing but agita (as my italian mother would say).

If you feel like this guy can't be trusted to handle your money properly, well, then.....I think you need to look at other PB's....
 

chyvan

Well-known member
Jun 22, 2015
73
Phoenix, AZ
Your paycheck analogy shows you are the exact same as them, but you hacve never thought about it that way.
I have no idea what this means. I do the work, and then get paid. Just like the builder should do.

Why is it OK for you to wait 5 days for your paycheck. I work 2 weeks, and on day 14, I leave with a paycheck for those 14 days. I am not left hoping my pay comes a week later. For you, you are taking a risk. The company goes bankrupt before you get your last paycheck, and you can easily be out money. You are hoping that you get paid, like a prepay person hopes that they get their goods.
Then you don't know much about how business bankruptcies work. I might take a loss, but employees are first in line, and get 100%. It's only those that disappear in the middle of the night where you'll take a loss, and you usually know it's coming because the phones or power are always getting shut off and paychecks that bounce.

If you have ever in your life bought any good online, then you have prepaid. If you have ever in your life had a subscription to a magazine, you have prepaid. If you have ever bought an extended warranty on anything, including a car or a house, then you have prepaid.
Sorry, I use credit cards to buy stuff online. Visa/MC rules require that the merchandise is shipped BEFORE they can bill. If the merchandise doesn't show up, I dispute the charge. I've never lost a nickel. The merchant processor requires a reserve account typically in the 15% range, and when a merchant has a lot of chargebacks the percentage can be increased, or they'll just shut down the account. You know when an online merchant doesn't take a credit card, that something is up.

IF a contractor wants to screw you, he will. You can negotiate anything that you want, any type of post payment, terms, deliverable list, etc, but at the end, you can get screwed one way or another.
If you don't pay for what you don't have, you can't get screwed. The whole point is the PB goes belly up, you just get someone else to finish it and you aren't as big a loser as you could be.
 

grottoguy

LifeTime Supporter
Aug 24, 2014
462
NJ
Chyvan,

I think Yev's point was that in everyday life the risk of nonpayment vs non-receipt of services (or receipt of defective services or products) is allocated either to the buyer (homeowner) or service provider, depending on the type of service or product. Have you ever bought a plain ticket with a credit card? Then the risk of the airplane's nonperformance is on you. Have you ever bought car insurance, health insurance, or an annuity? You prepay on the hope the insurance company will be able to fulfill its obligation. Have you ever bought a product on vacation? If it is defective when you get home (or is shipped to your home defective) the fact that you used a credit card will not protect you under the law unless (under the Fair Credit Reporting Act) you purchased it within 100 miles of your billing address. Visa or Master card could elect to help you out, but in many situations they won't and are not required to. Have you ever signed your kid up for a basketball or soccer league? You prepay and hope the league is around to perform its obligations.

The homeowner here was very clear that this was one of the few builders that returned its call, that the PB's reviews were generally quite good, and that it was willing to work with him on price. However, in return this PB wanted to allocate risk of nonpayment (or risk of nonperformance as the two go hand in hand) ) to the homeowner. That is a perfectly acceptable business practice, and the homeowner has to weigh all the facts in determining whether he or she wants to use this PB. But the notion that this PB should be summarily dismissed simply because of his allocation of risk onto the homeowner is just not good advice.
 

chyvan

Well-known member
Jun 22, 2015
73
Phoenix, AZ
Have you ever bought a plain ticket with a credit card? Then the risk of the airplane's nonperformance is on you.
I'm convinced you guys live in a different world than I do.

I dispute the charge, and get my money back. Non delivery of merchanise or services is not the same as a complaint over shody merchandise that's covered by the Fair Credit Billing Act, and not the Fair Credit Reporting Act. The fact that you got that wrong makes me wonder.

Have you ever bought car insurance, health insurance, or an annuity? You prepay on the hope the insurance company will be able to fulfill its obligation.
You're comparing a government regulated industry to a PB. I'll take my chances with an insurance company, but not a PB.

Have you ever bought a product on vacation? If it is defective when you get home (or is shipped to your home defective) the fact that you used a credit card will not protect you under the law unless (under the Fair Credit Reporting Act) you purchased it within 100 miles of your billing address. Visa or Master card could elect to help you out, but in many situations they won't and are not required to.
Seriously? I buy cheap consumables on vacation. I don't come home with TVs or refrigerators.

Have you ever signed your kid up for a basketball or soccer league? You prepay and hope the league is around to perform its obligations.
I'd be more worried that my kid would lose interest after springing for the equipment and quitting.

But the notion that this PB should be summarily dismissed simply because of his allocation of risk onto the homeowner is just not good advice.
I worked construction projects on the client side with two large outfits. We NEVER paid up front. The only ones that get duped by this scam are home owners, and it's because they are just not sophisticated. I have had contractors ask for money up front "to buy materials," in my private dealings. Each time I sent them away, they always relented. There is no custom that this is just the way it's done. They do it because they get away it. Is it always going to be a problem to prepay, no, but when it is, it costs people thousands of dollars that they usually can't afford to lose. If a builder's cashflow is that tight, it's a warning to run.

Your examples aren't that great either. You're comparing stuff that maybe costs $500 tops with a $50,000 construction job.
 

ewkearns

Well-known member
Aug 19, 2014
693
Shallotte, NC
Another "prepayment" issue is Texas Law.... from the link I posted. it is clear that, if you prepay a PB and they skip or non-complete, you have not only lost THAT money, but you are on the hook for ANY and ALL of the expense that the sub-contractors have incurred. The unhappy pre-payers, in the article, may have pre-payed their way into an indebtedness of twice the original agreed-upon amount.

Knowing that, even with staged payments, I'd want written assurances from all subs that they are happy, before moving on to the next pahse....
 

DaninFLA

Well-known member
Apr 29, 2015
1,011
Sarasota, FL
The only ones that get duped by this scam are home owners, and it's because they are just not sophisticated. I have had contractors ask for money up front "to buy materials," in my private dealings. Each time I sent them away, they always relented. There is no custom that this is just the way it's done. They do it because they get away it. Is it always going to be a problem to prepay, no, but when it is, it costs people thousands of dollars that they usually can't afford to lose. If a builder's cashflow is that tight, it's a warning to run.
totally agree with this point. I have been saying the same thing in other posts, specifically how people get pushed around by a PB and they are afraid to tell them no when things go wrong (i.e. correcting poor work) or when the PB is trying to spec something they don't want (I.e. just say no, don't need to "persuade" them or "ask nicely"). for some reason people seem to put too much emotion into pool builds and treat it like a personal friend is doing the work, and not an insured/licensed contractor. and every time I post this information/advice, I seem to get flamed...and I don't get it.

the fact that prepay has become the "norm" apparently is proof of this. I work in a field where I am constantly involved with contractors, from small work to large projects. pre-pay is never an option, EVER. people want to say that is somehow different than building a pool. its not.

if you want to compare, then lets use a small home remodel. if you were doing an addition to your house for $30k, the contractor isn't going to have you prepaying for each phase of the work. they might ask for a small retainer/deposit at the onset of work, but you are not going to be paying for each milestone before they begin.

there is a huge risk in way people are paying their PBs. no big deal if you don't get burned, but people do sometimes. better do your homework on your contractor.

- - - Updated - - -

another question for the OP....have you considered taking out all the non-pool items from your contract??? If it were me, I would rather have another contractor doing that work and you could probably save some money. would also limit the amount of money at risk. hire a PB to build a pool, hire a contractor to build the structures, kitchen, fireplace, decking, etc. I would rather have someone that specializes in this work do the work. I would never ask a framing contractor to build a pool, same for asking a pool builder to build a structure that connects to your house.