Roofing contractor wants excesive amount up front

[plugeman]

Oklahoma

I recently signed a proposal/agreement to use a particular roofing company in the event they were able to secure an insurance claim. The claim is for hail damage to my roof. The roofing company was successful and the insurance company is paying for the roof. The issue is the roofer wants the entire first insurance check ($9500) up front which is approximately 70% of the total agreed price. I was very careful to read the agreement before signing and nowhere does it say any payment is required up front. On the back of the agreement is a statement says: “Payments are to be made upon date of delivery of material, and balance upon completion of work, other arrangements must be discussed with credit manager.” On the front under Terms of Payment, it is hand written “AS IS INSURANCE”. The “as is insurance” part I believe could be interpreted many ways, but not that I will hand over the first insurance check in advance. I have become very weary of this company since signing the agreement and would ideally like to dissolve the agreement. The agreement also states “This proposal will expire in 90 days from the date accepted unless extended in writing by the Company” There’s no reference in any as to when the work is to be done. I have a year to recover the depreciation from the insurance company so I’ve got some time.

My questions are:

1. If I just delay this whole thing past the 90 days am I in the clear, or, could they extend it and still hold me to the agreement without my consent?

2. Is there any way to interrupt the Terms of Payment “AS PER INSURANCE” to mean I am obligated to give them the entire first insurance check up front?

They say they need the money up front to cover most of the material costs. The fact is the material costs are only about $6000. I have told them I will not pay a dime until at least materials are delivered with a LIEN WAVER from the supplier.

3. How would you determine based on the only two items in the agreement pertaining to payment terms, how much I’m obligated to pay at the time of material delivery? The term “AS IS INSURANCE” seems very loose. Since the insurance company doesn’t stipulate payments to the contractor, what does that mean? In my view, I see the agreement to read…..the first payment will be made at time of material delivery in the amount determined by the insurance company for material cost; the remainder to be paid at upon the completion of the job.

I have thought about offering to just pay the supplier myself, if carrying the material cost is a concern. That would also take care of any lien issues from the supplier. The roofer is legitimate and has been around for a couple of years. I really don’t think they’re trying to scam me, but I can’t agree to pay that kind of money upfront.

Thanks in advance,

David

[coppermanandson]

I'll answer as a roofing contractor not a lawyer. No I would not give that much money up front until materials are delivered Unless the material is a special order material which is non returnable to the supplier. Then and only then will I require the homeowner to pay up front. I've been burn by homeowners who changed there mind after I ordered some special material and got stuck with it. A good rule of thumb is 1/3 at start of work, 1/3 when half complete with the remainder at completion.

[plugeman]

Item 1 on the back of the contract states: “The person executing this contract (salesman) must obtain the approval of the officer o the Company for this contract to be effective under any condition.” It has not been approved as they do not have the insurance information.

Item 12 states: “If this contact is cancelled by customer later than 3 days from the execution, the customer shall pay the company 15% of the contract price (insurance estimate) as liquidation damages, not as penalty.”

Would the date the Officer approves the contract be considered the execution date?

It seems to me the contract is invalid at this point as it hasn’t been approved. Further, even if “The Officer” approves the contract, I would still have 3 days to cancel it?

[justalayman]

the contract, as far as you are concerned, was entered into when you and the salesman signed it. You had 3 days from that time to cancel without penalty.


when the contract was executed is simply different than when it becomes effective.


you should be speaking with your insurance company about this situation. It may be possible for them to issue a check in your name and the contractors name.

as the roofer said, unless the material is special order, 1/3 is the absolute max I would pay up front. Personally, unless it was special order, I wouldn't pay more than 10% until delivery of materials. If they wouldn't accept that, then they can get lost.

You also need to be dealing with a licensed contractor if that is required in your state. You also must require the contractor to secure a building permit if required in your locality. It is not your responsibility nor in your best interest for you to acquire the permit.

most importantly; only deal with a contractor that has liability insurance AND is bonded and has provided the appropriate documentation and contacts to prove it.

[coppermanandson]

Just an additional note on insurance certificates. It must come directly from the insurance co. with you named and you address on the paperwork . If they just give you an official looking paper stating that they have insurance there is no way to know for sure what the policy covers or if it still in effect. By receiving directly from the insurance co you Know you are cover and you have all the contact info you need.

[MikeStan]

Definitly take the matter up with your insurance company. Most states have a specific maximum amount a contractor can ask for upfront, and 70% seems excessive. Also, if no money has changed hands, materials bought and work actually taken place, you should be able to cancel the contract with minimal fuss.

Agree completely with the poster who advises working only with licensed, insured and bonded contractors with verifiable bonafides.

Mike