Description

Anytime you start working with a contractor for the 1st time, you need to have all of these items completed, just one time so that your relationship with the contractor is started properly, and so you are protected. That is the benefit of an “unlimited quantity contract” (IQC). Then all future jobs will just require a purchase order with the scope of work. These are not one-sided documents but are designed to protect the one paying a contractor for their service so that you have great protection to ensure that the Contractor fulfills their obligations in the contract and scope of work. However, if there becomes a problem, these documents give you the leverage and protections that you need. Once you have these documents filled out and signed by your contractor, you are ready to move forward and have the work begin, and all you will need to do in the future on additional/future jobs is to create a purchase order (included) with the scope of work. This keeps it simple and keeps you safe.

Here is a list and description of each document in your new Contractor packet.

Introductory Letter to Sub-Contractors: This letter is a basic letter that explains to the contractor what and why you need the documents in the checklist along with some other basic information, including the very important task of getting your company listed as a named insured on the sub-contractors insurance policy.  Many builders and rehabbers do not realize that unless your sub-contractors get your company listed as a named insured, then if there is an insurance claim, it may not be covered.  It is extremely important that you read your own insurance policy.

Checklist for Contractor to fill out and give back to you:  Have your contractor fill out the information in the blanks, get it back to you, and save this document for future use when needed.  Also, make sure to fill out the “for office use section only”.  One of the main items is to check their status with the local contractor’s board so you can confirm they are active, in good standing, and that they do not have complaints or actions that would make you feel uncomfortable in working with them.

Indefinite Quantity Contract:  This is the road map of your agreement with your sub-contractors.  This protects you from many potential problems and is an absolute necessity.

Purchase order:  We give you a universal PO (supplier, contract labor), but this is what you send to your contractor to sign before they start work on any job, but after they have signed the Indefinite quantity contract and filled out the new sub-contractor checklist.  This keeps paperwork to a minimum on every job moving forward by just having to send the contractor a purchase order.  Make sure to have the job specifics in the purchase order, and reference any attachments (like building plans).  Make sure to include a sample copy of these purchase orders with the indefinite-quantity contract that your sub-contractor signs.

Invoice Template: Use this for those contractors that may not be savvy in creating their own.  It has all the information on it that you will need in order to process their invoice.

Lien release:  This is an extremely important document, and stops a contractor from being able to bill more than the agreed amount of the job and get away with it.  Also, many title companies or closing attorneys will require these to give you early issue title insurance.  These lien releases are just an all-around “must do” in your business.  Because you are just delivering a purchase order to a contractor to do work that is described in the said purchase order, when the contractor’s invoice comes in, all you do is match the invoice to the purchase order, and confirm the amount on your line item sheet budget.  Once you do that, all you have to do is send the lien release to your contractor to sign, which is contingent on them receiving the check.  Once you receive the signed lien release back from the contractor, you are now safe to release their check.  Make sure to include a sample copy of this lien release with the indefinite-quantity contract that your sub-contractor signs.

Draw Request To Lender: When turning in draw requests to your lender so that they can get you the funds to pay your contractors, using a straightforward document will not only make your look professional, but the lender will appreciate the ease in understanding the sub that is requesting payment, for what address, how much, and for what specific work, etc.

W-9:  This allows you to send the appropriate 1099 at year’s end.  The IRS will appreciate this one!