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The standard hold-back amount is about twice the value of the punch list items. How much retain age? Retain age is typically in the 5% to 10% range, although some contractors will negotiate for a fixed fee or limit.
First and obviously, your contractor shouldn't ask for an unreasonable sum of money up front. Yes, he needs money to get the project started, but asking for more than 15 percent raises a red flag, and most states allow contractors to ask for a maximum of 33 percent of the total cost up front [source: Chicago Tribune].
Contractors cannot ask for a deposit of more than 10 percent of the total cost of the job or $1,000, whichever is less. * (This applies to any home improvement project, including swimming pools.) Stick to your schedule of payments and don't let payments get ahead of the completed work.
50% up front is normal especially on smaller projects. On larger projects you should argue against 50% and instead set a calendar of stages and payments. Your locality can impact how it's done in MA a contractor isn't allowed to charge more than 1/3 up front. Most still charge 50% anyway.
You shouldn't pay more than 10 percent of the estimated contract price upfront, according to the Contractors State License Board. Ask about fees. Pay by credit when you can, but keep in mind some contractors will charge a “processing fee” for the convenience.
6 Answers from Builder Extension Builders In answer to your question about money up front you should be paying no more than 10% up front and then only when initial materials arrive at site.
You can withhold payments from a subcontractor if he does not perform the job in the time frame specified by contract. Most contracts contain penalties for every day that the contractor completes a job later than outlined. In addition, you may suffer damages as a general contractor.
More In File Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors.
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