Deposit for pergola

Hi all
I'm hoping someone would have more experience dealing with a similar type of situation may be able to help me. I've put down 10% deposit for a build a couple of months ago and today I received another invoice for 30% of the total build for precommencement. I haven't received plans for the pergola yet and the building application hasn't been lodged. Is this a normal practice?
Thanks!

 

Don't pay any more until you see some progress. It is sounding dodgy.

What is the value of the work?

What type of tradie are you using? Do you have a contract?

What is precommencement supposed to cover?

 

It is illegal to demand excessive deposit. If you are in QLD, you can get a complaint form from QBCC's website and report the builder to the QBCC. The builder will be punished under the S64 (1) of the Domestic Building Contracts Act 2000. The Act clearly states how much (in percentage) deposit a builder can ask or receive. The Act is also available online.

I referred a landscaper to BSA (new name: QBCC) a couple of years ago and he was fined $2000 for his dodgy contract.

 

10% is the max any builder can take in vic for a deposit. Not sure about ACT

 

Wow. I am glad I am not a builder in Vic. For a lot of small jobs, materials are 50+% of the job.

I would want the client to at least fund the materials and I fund the labour until job completion on small jobs like pergolas.

 

Thats why we have progress payments, protects both parties. We use them and covers us and our client. Eg in a house, after deposit, next payment due at slab pour.

 

For small jobs like that, either you can take progress payments at certain stages, or you can charge for the labour and have them pay directly for the material supply.

 

Totally agree with big jobs like building a house - deposit, earthworks, slab, frame, ...

 

The problem with small jobs are that the stages are small. One doesn't want to create an admin nightmare which just increases the admin component.

Last month, my daughter completed a patio. She paid more than 50% for the concrete slab and the patio materials upfront. She paid the balance after final inspection and handover of all paperwork including LGA certificate.

In my books, for small jobs, I wouldn't want say 10 progress claims. One would have one or two claims every day and one would have to stop the job until the claim was paid.

Nah, keep it simple. I am happy with a couple of claims - say, one at the beginning and one at the end.

 

This second payment isn't a deposit. It's a pre-commencement draw down.
It's pedantic I know....

What does your contract/quote say? The progress payments will be detailed in that. If not I would send it back to them unpaid.

And even then I would be asking for the details of work progress to date. If you haven't even finalized a design, wtf have they done in the last couple of months?


Blacky

 

Really? Where is that stipulated?

In most cases it's agreed by both parties . Usually not excessive amount

I just paid a 50% deposit for an awning but i know the guy

@Kipper Id wait til you the da and plans back showing the job is all good and ready to progress. Then agree to an amount for materials, I'd think 40% then remainder at completition. (Or progress depending the size )

 

Here is the info from consumer affairs- we only do jobs valued under 20k so only ever take 10%. I forgot that its only 5% for bigger jobs.

It only really applies to registered builders though, I believe they are the only ones that an be prosecuted for taking larger deposits.


Deposits for building work
The law governing contracts for building a home, or extending or renovating a house, in Victoria is the Domestic Building Contracts Act 1995.

When you build a house, renovate or repair your home, or add an extension, you pay a deposit and then make payments for completed stages of building. These are called stage or progress payments.

The law:

• sets an amount for the deposit
• defines the stages of building and how much you pay for each stage, including the final payment
• only allows certain changes to the price stated in your contract.

By law, your deposit for building work can be no more than:

• 10 per cent, if the total contract price is less than $20,000
• five per cent, if the total contract price is $20,000 or more.

If you pay too much deposit:

• you risk the building contractor taking the money and not finishing the job. This can leave you with a long and costly legal battle
• the builder may be unable to finish the work on time or fix defects
• the domestic building insurance company may not cover advanced payments on work not carried out if your builder dies, becomes insolvent or disappears.

Do not pay your deposit until the builder has given you a domestic building insurance policy and certificate of currency for your property.

Domestic building insurance covers you if the builder dies, becomes insolvent or disappears. For more information, visit the Victorian Managed Insurance Authority ’s website.

 

@Otie, I am not in Victoria but both of my kids are.

For jobs under $20,000, I assume most tradies in Victoria will ask for a 10% deposit (really a booking fee) and a pre-commencement stage (to cover council fees, materials, etc) of say 30% or 40% ?

Different ways to skin the same cat?

 

I personally would cover the material costs etc, and only take the 10% deposit until work reaches a certain stage.
I also wouldn't employ any trade asking for more than that, as I think if he doesn't have cashflow to cover costs until he gets a few days in, I don't think he is running his business well enough. One thing I hate is dealing with tradies constantly needing money to buy materials, I find it unprofessional.
We find progress payments great, we outline the timeframe, explain to clients that its a bit of a PITA paying every 2-3 days, but it really protects them (they don't pay a stage if they aren't satisfied) and us as we don't move to the next stage til we get paid. We accept credit cards and bank transfer, we have never really stopped work as we are happy enough to continue on if they say they have made the payment (haven't come across one yet that has lied and not paid). It gives our clients confidence too that they won't get burnt (we come across a lot of clients who have been screwed over in the past and are cautious with trades.

 

Very well said, Otie. I wouldn't use trades who runs business without cash flow because it's too risky. Also, if a trades had no intention to obey the law, I cannot see why consumers should trust him.

 

It has nothing to do with cashflow. It is all about risk management, from the tradie's perspective.

In business, it is known as the "Call Girl Principle".

 

Thanks everyone for your input it's been very helpful. So I emailed my builder and he came back saying the invoice was automatically generated and to disregard it. I'm assuming they'll only need the pre-commencement payment closer to actual pre-commencement.