Piggy-backing on Travelingchild's post I would say spend the money on an AIA 101-2007 Owner Contractor Agreement. This is a contract that has stood up in court countless times and will give you the legal means to fire the contractor should he not fulfill his duties. Also if creates a schedule of values and sets standards for payment. The contractor will issue payment request forms once a month. He has to give you a pencil copy a week before the payment is to be signed. You will review it to make sure that the payment he wants is justified and that the materials and labor has been incorporated into the work. This is usually taken care of by the Architect. He/she signs off on you and gives it to you to issue payment. This way you know that you are not paying for work that has not been done. You will also retain 10% of each payment so that at the end of the work and you have a certificate of substantial completion you are still holding a 10% retainage. Once you have a release of leans and the contractor has completed the punch list, you will release the retainage.
..It was you to me who taught
In Jersey anythings' legal, as long as you don't get caught.
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