# bank draws



## dutchlegacy (Feb 29, 2008)

hey folks.

this is a new one to me. Today I went over our draw summary for a job we are starting next week. We usually do 4 or 5 draws on jobs over 100,000. down payment to get the ball rolling, draw after site work and foundation is completed, draw upon delivery of building package, draw when roof is finished, and the balance to be paid within 15 days of completion (pending a mutual sign-off). 

Today, the guy representing our customer's loot at the bank tells us we will need to send every invoice from every sub and supplier through him, with signed affidavits protecting the owner from a mechanic's lein. He will cut all the checks, and we will need to submit invoices for each stage of the job to get paid. This seems like total bull to me, and makes the process overly complex for me. I guess some GCs haven't been paying their subs recently, or something scared the crap out of this bank (probably dealing with a lawsuit or two right now). 

So, I say a big thanks to all the jerks out there that are stiffing their subs. :furious: is this a standard operating procedure for anyone else? it seems like a bunch of extra stress to me.


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## rbsremodeling (Nov 12, 2007)

dutchlegacy said:


> hey folks.
> 
> this is a new one to me. Today I went over our draw summary for a job we are starting next week. We usually do 4 or 5 draws on jobs over 100,000. down payment to get the ball rolling, draw after site work and foundation is completed, draw upon delivery of building package, draw when roof is finished, and the balance to be paid within 15 days of completion (pending a mutual sign-off).
> 
> ...


 
Baloney never done it that way in 20 years. tell him to build it himself


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## dutchlegacy (Feb 29, 2008)

its funny you should mention that...I asked him why he doesn't just become a GC as well. little punk had me pretty ticked off (I'm usually pretty easy-going).


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## BigLou (Jan 30, 2008)

Someone has to pay for all that extra time & paperwork. I'd say your customer needs to find him/herself a new banker.


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## philner (Dec 27, 2007)

I've dealt with some difficult banks to get draws from but that takes the cake. No way would I operate that way. Tell the homeowner to find a different bank or see if you can negotiate a lein waiver set up with that bank. Phil


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## dutchlegacy (Feb 29, 2008)

as a general rule, I try not to do any heavy-duty complaining when dealing with customers and banks, but I couldn't help myself today when he was yammering on about this process. I displayed my dissatisfaction as tactfully as possible...his response: "get used to it, you will see a lot more of this in the future of the trade". I rarely feel like punching people, but today was an exception.


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## Chris Johnson (Apr 19, 2007)

It's pretty standard if your client doesn't have a line of credit they are working out of. Your draws will take an additional day or two.

Out here I call and get conditional releases from all suppliers and submit with the draw or I pay them and obtain a full release.


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## LeeQuality (Apr 26, 2007)

I have run into this actually... there is a small local chain of banks in my area that has operated in the same fashion for several years now. A pain in the butt... I always mention how easy our financial institution is to work with and have a card handy at the first meeting to try to avoid the extra hassle.


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## Fence & Deck (Jan 23, 2006)

Here in Toronto that is S.O.P. I always find it amazing that we have to have the invoices in by the 25th of the month, with payment due on the 30th of the month following, but it seems we rarely see the bucks before the 15th. It's always "waiting for the bank".


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## MikeTheBuilder (Oct 3, 2007)

*CEU Classes*

sorry


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## Tscarborough (Feb 25, 2006)

The proper terminology for your situation is "joint check agreement". This means either his or your credit is no good, and the bank is not going to give up any money until it has lien releases from everyone for everything.

I do them all the time for marginal subs/contractors, but never for marginal owners.


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## philner (Dec 27, 2007)

dutchlegacy said:


> hey folks.
> 
> this is a new one to me. Today I went over our draw summary for a job we are starting next week. We usually do 4 or 5 draws on jobs over 100,000. down payment to get the ball rolling, draw after site work and foundation is completed, draw upon delivery of building package, draw when roof is finished, and the balance to be paid within 15 days of completion (pending a mutual sign-off).
> 
> ...


When you say "He will cut all the checks" is he planning on paying the subs directly? Phil


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## mdshunk (Mar 13, 2005)

A signed lien release should be good enough. The extra information that he would be privied to, from the actual paid invoices, is pretty private information that I wouldn't necessarily want any customer (or their banker) to have.


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## rbsremodeling (Nov 12, 2007)

dutchlegacy said:


> its funny you should mention that...I asked him why he doesn't just become a GC as well. little punk had me pretty ticked off (I'm usually pretty easy-going).


 
Unless you really need the job tell him how you do business. Give him your contract, draw schedule and lien releases as necessary. Banks use to try it on us all the time until they realized we weren't the average bear, Don't let him or the bank force you into terms you are not use to or uncomfortable with. Sometimes there are more than one inspector/bank guy you can request or ask if their is someone else available to do the inspection/job monitoring. 

I would never show any one an invoice unless it was in a court of law or arbitration. it is unecessary


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## oldfrt (Oct 10, 2007)

I've had GC's hang a lien waver in front of my face saying I should sigh it so I could get paid.
The only time I'll do this is when I know I can trust the GC,.because the lien waver is suppose to be signed after you receive payment.
Unfortunately the way the draws from the banks here are made,every payment from the bank is preceded from an on site inspection by a rep from the bank before the check is cut.Most GC's have to use their own money to satisfy a subs payment requests if they refuse to sign the waver before payment.
The banks end up protected,the subs are taking a chance on the GC if they signed off,or the GC's have to use their own funds or get $ from HO.
Some GC's were using the lien wavers to line their pockets and not pay the subs and since they already signed off had no recourse.
Fortunately ,it's a small town and word traveled fast,so those guys have since moved on.
I think the banks practice is a good way to protect the subs,but it will cost the GC more time and aggravation.


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## philner (Dec 27, 2007)

I have no problems with lien waivers, but if he's looking to cut his checks to my subs and suppliers on his schedule? That I have serious issues with. Phil


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## dutchlegacy (Feb 29, 2008)

Well, I had a sit-down with mr. banker today. interesting. it turns out he is good friends with our client... *bad feeling in stomach*...I don't like this one bit. I will insist we take a different route on this. I do NOT feel comfortable doing business this way. :furious:


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## Duane1982 (Dec 3, 2007)

I'm doing a (or was) job for a client that has a run down house. We signed a contract contingent upon him getting financing for the roof system and decks. He call and says got approved for the 21 grand he asked for, great I thought. Bank calls me today and says the company policy on remodeling states that there is no down payment just half total payment on half completion. I almost fell over. Guess I'm not doing that job:furious:


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## Double-A (Jul 3, 2006)

Duane1982 said:


> Bank calls me today and says the company policy on remodeling states that there is no down payment just half total payment on half completion. I almost fell over. Guess I'm not doing that job:furious:


I would have told them my company policy states there is no remodeling without down payment. They are the bank, not I.

I hope your client enjoys his leaking roof. Perhaps his banker could recommend an honest mortgage broker that would be willing to repair the roof for him.


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