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Up Front Payments. Part 2.

I know that often a builder will ask for a percentage payment up front. I know of cases where builders have asked for 25% and sometimes up to 50% before doing a stroke of work.

My last blog ended with a question. What should you do if your builder asks for money up front? The simple answer is don't. Don't pay any money up front for work that is not done. If you stick to that principle you cannot go wrong. It may seem harsh, but think about it. You have to work for your money. When you go to work, you don't get paid before you have done anything. When you go shopping you only pay for what you buy, and you have the Sale of Goods act to back you up if you are sold something that is not fit for purpose.

As I wrote in my last blog, if a builder needs money up front, you should ask some searching questions, because there can only be perhaps three reasons.

1. It is an attempt at a rip off. Now dodgy builders may be a tiny minority, and the chances of a rip off very small. But surely you would avoid it like the plague?

2. The builder has got into some trouble. It may not be of his doing but what if he uses your money to pay off outstanding debts? Perhaps for materials or subcontract work he has used on a previous job. As I say, it may not have been his fault, anything could have happened, but why should you take the chance? And it is a real chance, because if your money is used in that way, there will be nothing to finance your job - the job you have paid for - and in that scenario, you will find yourself paying again and again up front, in the hope that it will work out. Of course if you follow the logic, it will end up with you having paid out all the money and your project will be unfinished. Which leaves you out of pocket and having to pay even more, to get it finished.

3. There is a genuine reason. Maybe a small business start up, or perhaps some genuine delay in receiving due payments from previous jobs or clients. Whatever the reason, if it is genuine, there are many better ways to work with the builder to achieve the result you both want.

So in principle, do not pay money up front, for work that is not done!

Quite simply, if the builder insists on a large ( in relative terms ) sum of money before any work has commenced, and has no real explanation for why he needs it and what it will be spent on, you should not agree to it. You will be leaving yourself exposed to serious risk.

The thing is that, if you make the first payment up front, the risk is that when some work has been done, you will be asked for further payments and so on until you have paid out all the money before work is completed. There is then no incentive for the builder to complete your project as there is no more money to be made. Which is when you find out that to get the job finished, you are faced with paying out more, maybe much more, that you should have.

So what should you do, when your builder asks for money up front?

More later. The Project Master