Steve Payne
My client had been told by her friends that 'contractors will not pursue payment' if there was $5,000 or less owing!
Canadian ContractorExcept the contractor, Richart, did pursue payment, in small claims court - and Ms Deadbeat had to pay up. "It cost me almost the $5k I got back - but you have to go on principle," Richart said.
Richart, a renovator in Southern Ontario, emailed me his entry in the Customers From Hell contest.
“A few years ago I had a customer call me to do a quote on a basement renovation. She had hired a designer to help her make decisions about finishes, etc.
She picked all the high end luxuries such as $500 light fixtures, a stainless steel laundry tub and the list goes on. Since that is what she wanted, that is the way I quoted it. The quote came in around the $50,000 mark. She felt that was high – so we worked backwards and pulled out a lot of the high end items and got down to a more reasonable $30,000.
Day 1 she started to add back in some of the items that we had pulled out. And that continued to the end of the project. We ended up back to the originally quoted job pricing. I had her sign off on each item as they went back in because of the bells and whistles going off in my head.
I submitted for first draw about half way through the project and had no issues with payment. She was very happy with the way the job was progressing. We finished the work on schedule and sent in the final invoice. The payment for the work was not made within 30 days so I called her to ask when she would be making payment – and she again said that she was very happy with the work and would send out payment immediately.
A week later I received a cheque for the work minus $5,000 with a note attached saying that by cashing the cheque I was agreeing that the work was paid in full and I would not be getting the $5,000. I then called her to ask her about the attached letter and the $5,000. She very quickly responded to me that she “knew” that it is not worth my time to go after her for the balance because of legal fees and the aggravation of collecting that money.
I again asked her if there was an issue with the work or if she felt that the invoice was not fair. She again just told me that I was wasting my time trying to collect. She had been told by friends that contractors will not pursue payment if there was $50,000 or less owing.
WRONG
I went to see my lawyer and he told that it was going to cost as much to get the money as what is owed and I may not want to sue her in small claims because of that.
WRONG AGAIN
I hired the lawyer – took her to small claims and won the case with the help of the sign off sheets for all of the extras. The judge assured me that if I had not had the sign off sheets for the extras that it would have been a very difficult case to win. He also took a few minutes to lash out at her about not paying contractors if the bill is less than $5,000.
Yes it cost me almost the $5,000 that I got back but sometime you have to go on principle.”
Richart
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nice
Some people are unbelievable. If you stopped paying off a vehicle loan with $5000 remaining, they’d come reposes it. Shouldn’t contractors have the same right?
It seems like this lady should be on the hook for the legal fees of the contractor as well.
So, Contractors advertise and there is BBB and other rating companies out there. When are we going to have our own Reputation database to put deadbeat customers there, so other contractors will be aware before entering into these hellish projects. Individuals can harm a company reputation, but if it goes the other way, it is called “privacy” and you can not post it???
We want to do it, but it’s not as easy as it sounds. I think it would have to be a gated, pay site. Building the database would be a challenge. It would take a long time before it would become useful to contractors.
Perhaps you guys should consider changing your terms. Even for the best clients we begin with terms of – a percentage (10 to 50%) at signing contract (includes job scope). another percentage on start date – a percentage halfway – and a percentage on completion. This is a norm around Calgary, at least I’ve never had any objections to these terms, they may want to negotiate the percentages but not that much. If they don’t want to work with these terms perhaps their just dead beats anyway. Think about it, most renovations you are ordering products and materials before you start, not to mention the time you spend measuring, estimating, meetings etc etc. And if your doing kitchens or bathrooms those products you need to start the job are not returnable. Give your head a shake.
Am I missing something here? In the US, small claims court does not allow lawyers. I am wondering why you needed one? You had all the data. Maybe you should now go back to small claims and sue her for the 5K in legal fees, if it is not too late.
Ben, There are several ways to make up a payment structure. I for one will take a 10% deposit and then for all stages they provide a cheque. If a job has a $100K price tag there may be 12 installments. You are purchasing items before you are actually on the job but you charge them for it, eg, kitchen companies want a 50% deposit and you haven’t even started the job but you need to get the kitchen into production so you would have an installment for this amount. We have changed the way we do it and that is to get the installment before a stage starts versus when it is complete, but this just allows for better cash flow.
Not many of my customers will give me a 50% deposit and in the 8 years we have been in business we have always been paid by the customer.
Your suggestion to take up to 50% at signing and then another percentage the day you start is something that would not fly here in Ontario never mind the fact is I have not spent over 50% of the contract dollar amount and I could not justify those terms.
We do medium to large renovations and I can only see your terms working for small renovations (less that 10K) I cannot imagine telling a client that we are going to be taking a deposit of $250,000.00 for a $500,000.00 contract.
I agree with Gail, go after the 5K that you spent, it was certainly not in the original budget and you are still out 5K
I am so tired of deadbeat customers. Bet ya she paid her designer.