Up Front Building Payment

[houlio]

I am attempting to rebuild a cottage in Republic Of Ireland in a relatively remote area. I'm having to deal with very local builders and have an Architect working for me.
Both builders who have quoted for the works ( Circa £80k) are asking for 25% upfront before they lift a hammer. I'm told this is normal for the area.
I am nervous for obvious reasons.
Is it possible to get insurance against the builder defaulting / going bankrupt etc?
Any help appreciated

 

[holmslaw]

You can deposit the money with a bondsman, or use an escrow provider.

They hold the money until the agreed terms are met ie. builder gets his 25% when he's done 25% of the value.

Does'nt mean your builders will accept it though.

 

[cmother1]

Builders (well, honest ones anyway) normally want up-front money to buy materials. Putting the cash in escrow won't help them do this and I should think their chances of getting a loan at the moment are zip.

 

[holmslaw]

In the commercial building world builders get paid for materials on site, because once on site they become the clients property.

They can also be paid for materials stored off site, as long as they are kept seperate from all other materials and are clearly labelled as being the property of the client. In these cases I think the client has to pay for the insurance.

 

[houlio]

Builders (well, honest ones anyway) normally want up-front money to buy materials. Putting the cash in escrow won't help them do this and I should think their chances of getting a loan at the moment are zip.

I was thinking of agreeing to a much smaller upfront payment but at least weekly additional payments via the Architect. I appreciate its tough out there for small buildrs so I want to be reasonable but I also want to see some immediate return for my money in case the worst happens and I need to find a new builder.
My immediate thinking was to agree a shedule of what needs to be done and link the initial payments to that?
any thoughts appreciated?

 

[joe-90]

25% of the total price is a lot more than a builder needs to get started. Surely he can get on with the knocking down, clearing out etc without any money at all? Tell him to give you a list of materials he needs and when he needs them and you'll release funds to cover it.

 

[cmother1]

I can't speak for the cash-flow of rural Irish builders, and obviously don't know the nature of the job you're undertaking, but if it involves an architect I'd expect it to be pretty lavish. That said 25% is a big chunk up-front. Start negotiating: explain your apprehensions to the builder and ask why such a high percentage is needed. Bear in mind that the builder might be just as suspect of you, as you are of him and doesn't want to commit significant resources on a client who might disappear. It doesn't sound as if you are a local in the area.