Safeguarding deposit

[Barleycorn]

I am thinking of getting some modular buildings made. The firm that I am speaking to is well established, but quite small. They will want a substantial deposit, which is fair enough as they have to buy materials etc. In this present climate if they went to the wall I would lose my deposit. Is there any way of safeguarding this, insurance etc? Or should I get them to put the materials in my name so any bailiff can't get hold of them? Sorry to sound so negative, but you have to think.

 

[Barleymow]

Would a credit card give you any protection

 

[steveR]

Would a credit card give you any protection

Needs a private, not a business card....

 

[Wombat]

Needs a private, not a business card....

I have had a private claim rejected as it was a business purchase so in my experience. No

 

[7610 super q]

You are right to be cautious. Paid a £15k deposit on a mobile poultry house in 2005. Company went bust. Luckily they were taken over and the new owners honoured my deposit.

 

[milkloss]

Do any banks do escrow services?

 

[Bloders]

you can get a bank to hold the deposit. I cannot rememver the term used, but a place where i worked used to do it for sizeable orders.
In effect, the client pays the money to a bank who hold it until the goods are made and correct. They then release teh funds to the supplier.

 

[milkloss]

you can get a bank to hold the deposit. I cannot rememver the term used, but a place where i worked used to do it for sizeable orders.
In effect, the client pays the money to a bank who hold it until the goods are made and correct. They then release teh funds to the supplier.

Letter of credit maybe?

 

[Al R]

you can get a bank to hold the deposit. I cannot rememver the term used, but a place where i worked used to do it for sizeable orders.
In effect, the client pays the money to a bank who hold it until the goods are made and correct. They then release teh funds to the supplier.

But that just shows that you can pay for it, what @Barleycorn is asking is some way of paying for the materials through the builders so if they go bust they can’t take his money but they can purchase the needed materials with.

 

[milkloss]

But that just shows that you can pay for it, what @Barleycorn is asking is some way of paying for the materials through the builders so if they go bust they can’t take his money but they can purchase the needed materials with.

the builder has to get credit based on the letter of credit. Their bank has to have faith that their client will be stable enough to deliver the goods and therefore receive funds from the customers letter of credit

 

[Bloders]

But that just shows that you can pay for it, what @Barleycorn is asking is some way of paying for the materials through the builders so if they go bust they can’t take his money but they can purchase the needed materials with.

The amount of deposit paid can vary between 0 to 100% of value. Can be released in stages etc. All fairy flexible and very safe to use.

 

[Al R]

the builder has to get credit based on the letter of credit. Their bank has to have faith that their client will be stable enough to deliver the goods and therefore receive funds from the customers letter of credit

Yeah that would be a good way then! Getting someone from the bank to write such a letter, now that could take time!

 

[puppet]

I have had smaller firms agree to me buying the materials then labour is paid on weekly rate. They may ask for a higher hourly rate as they make no margin from materials. If you buy them they are yours and you could also get another firm to finish the job
When building a house a one-man band gave me a list of materials to take to a trade centre. I was amazed at the price and if it was 3 times higher I would never have questioned it.
I would have thought that an insurance company would want credit reports, 3 years accounts, projections, etc which your man won't have time to do.

 

[steveR]

I have had smaller firms agree to me buying the materials then labour is paid on weekly rate. They may ask for a higher hourly rate as they make no margin from materials. If you buy them they are yours and you could also get another firm to finish the job
When building a house a one-man band gave me a list of materials to take to a trade centre. I was amazed at the price and if it was 3 times higher I would never have questioned it.
I would have thought that an insurance company would want credit reports, 3 years accounts, projections, etc which your man won't have time to do.

Done two builds on this basis. I source the materials using a Schedule from the architect/designer/whoever, even the builder.

I do remember agreeing to the builder and I going to a Merchant to cost some timber and other materials one time, as he had assured me that "he can get a good price for me...." Suffice to say, my quote beat his by 15% as I recall. Builder was very pee'd at his suppliers, and changed soon after!

 

[Foxhollow]

One way is to pay for materials/ work on a weekly basis based on invoices for materials, then you get an agreement from them that once you pay for the materials/ work that element becomes legally yours. So every time you pay there is a schedule of what it has covered and that your materials are identified as being yours in their yard. Do not pay for anything that the modular building company has not received in their yard. So before payment visit their yard to see the materials and any paperwork. It is called vesting. If he is a reputable firm he will be on 30 day payment with most of his suppliers.

Companies always try it on with "deposits", in essence they are advance payments. I would always only pay for work or material that have been done/ delivered. Even if that is on a weekly basis. This deposit/ advance payment is a rouse that building contractors always try on, and usually it goes to pay other projects that are in difficulty.

I have worked for 30 years in the civil engineering and building industry as project manager and also acting as contracts manager for both contractor and client sides, I was also a partner in a quantity surveying firm.