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Is there a maximum percentage a general contractor can ask for an apartment renovation in Manhattan?

New YorkConstruction Contract

I'm doing a full gut renovation of my 945 rsf apt. My contractor is asking for a 40% deposit on a job that will take about 12 weeks. 2nd payment of 30% is to come after upon completion of both bathrooms and kitchen tile installation, and final 30% upon completion of unit. I am getting a new kitchen, shouldn't the 2nd 30% be paid upon installation of the cabinets? I am also getting vinyl flooring to look like wood flooring which will be placed on top of existing parquet flooring. When should this installation fall in the payment scheme? Thank you.

1 reply

Feb 26, 2020

It's extremely common for a contractor to require a down payment. And, it does not appear that New York limits the amount that a contractor can require as a down payment. Instead, that's up to the parties to negotiate among themselves. Typically, down payments will fall somewhere in the range of 15% to 30% in my experience - though, I'm not familiar with the New York market and what's considered acceptable there. And, down payments outside of that range may be perfectly acceptable on some jobs. The same is true for the payment schedule - it's really up to the parties to negotiate what they think is agreeable. Though, for a job that will have an extended construction schedule, paying in large chunks - especially at the outset of a job - might not always be the best idea. Rather, a payment schedule that more or less mirrors the construction schedule and utilizes regular progress payments might be a better idea. That way, the amounts being paid will more or less reflect the cost of the work or materials being provided. At the same time, though, it's certainly common to make payments based on certain project milestones. As mentioned above, it's up to the owner and the contractor to settle on terms they're comfortable with. And, for owners, prequalifying a contractor can help to settle anxiety about working with a particular contractor. And, finally, collecting mechanics lien waivers in exchange for payments throughout the life cycle of the job should also help to fend off potential payment disputes.

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