AIBU to think a £22k cash deposit is large and rather risky?

[TattyDevine]

Firstly apologies for talking about financial stuff on here, but it's difficult to do the thread without these details and I need the collective wisdom for this one.

I'm having my kitchen renovated. It's quite a big job which involves taking a couple of walls down and new flooring throughout as well as plenty of cabinets, worktops, appliances etc.

I've had several quotes, and to do it to the spec we want, it's a £33k job including everything including decorating etc.

One of the quotes I had wanted a £1k deposit to secure the commencement date proposed, a further £9k about a month before and then the rest on completion. Presumably to cover the cost of the cabinets, which are coming from Germany, some of them bespoke, and painted to your specifications etc. Obviously this protects the business from being stuck with cabinets they can't return if you change your mind or something like that - fair enough. More relevantly, they take cash, bank transfer, or credit card. Being aware that if you make a payment on a credit card for goods that don't come to be, you are covered under the consumer credit act. So no major risk to the consumer if for instance the company were to go into receivership or liquidation before your job was to start.

But the one I want to use total cost is also £33k, but wants a £22k deposit (which covers the cost of all materials) and then the rest on completion. He wants the deposit in cash.

I really want to use this guy, he's done 3 of my bathrooms in the past, I really like him, trust him and his staff being in my home and all that, the quality of his work is great, it runs like clockwork and he project manages every aspect from start to finish. His quote, whilst the same price as the other quotes I have, also includes enough extras to make it really enticing.

But £22k up front is a risk whichever way you look at it. And I would question why he should need the whole amount of materials up front...doesn't he have credit terms with suppliers on appliances at least? I get that some of it is bespoke and coming from Germany and could be a risk to him.

Does anyone have any opinions on this? Would you do it/risk it? Have you done it? Have you had a job like this done but not had to pay such a big deposit, do you have a business that does jobs like this and also ask for this deposit, in fact any views or opinions on this would be welcome.

At this point it's making me feel I should go with the other company with a £10k deposit on a credit card with no risk but I actually really want to use this guy... AIBU?

The biggest warning you can possibly have that a business is at risk of going bust is that they start asking for large sums of money upfront. Add marriage problems to that and you are being wilfully blind. Negotiate something better and if he isn't willing to do that, then don't trust him. Even normally trustworthy and reliable people can find their business going belly up and then all their formerly loyal workers who don't get paid, and formerly happy clients end up seriously pissed off... This is not just about the money, you really do not want a half done kitchen that you then need to negotiate for someone else to finish, and argue for money back from credit card companies.

Okay, a few points.

I believe I would be covered under Section 75 as it's the £22k I'd want to be covered for, not the whole £33k. So I'd make a deposit towards the £22k on a credit card, and have him give me a receipt for £2k deposit towards the following building materials - have them listed - balance of £20k due by [date] which is the bit I do by cash. Total £22k. Then separate contract for the labour. I'll be getting advice on this and double check that's all above board and would be covered before doing this, if I do it.

nevertakeyourphoneinthebath I will not be paying for any labour up front either. The £22k is the materials needed to complete the (very large) job.

So no different to your situation except I don't really want to be paying suppliers directly (mainly because I want the responsibility for any issues under the sale of goods act to be with him, the retailer, and I wouldn't want to have to go to to the supplier to deal with any appliances that go wrong, etc.

I'm going to have to chew it over...in theory it doesn't make a massive difference to me whether I give him £22k in one hit or less and then instalments along the way and then £11k at the end, as long as I am covered for that period after I've given him the cost of materials and the work starting for something going wrong.

The issue for me here is risk.

FoolsandJesters could you enlighten me as to what "Ahem " means?

I wouldn't do this for all the reasons stated above. I think you need a formal contract with this guy. Some of the online contract stores (Contract Store, rocket law) would likely customise one of theirs for you for under £100.

We did our kitchen 2 years ago - similar sum - around £30k
Ours is handmade by a joiner in solid oak, large bespoke units, plastering, appliances, floor, electrics wtc included. We paid a small deposit to secure the job, then a third when they started making the cabinets, a further third when the cabinets & appliances were delivered to site (floor, electrics & plastering had been done by then) and then the final third when everything was finished and snagged. This meant at the point when we'd paid 2/3rds we actually had work started and physical goods on site.
To be fair this was more of a risk for the company we used than in you situation as everything was bespoke handmade for our weirdly shaped kitchen and couldn't really be taken away and sold again if we didn't pay up. Your builder has less risk even if they are ordering from a German kitchen supplier as they will be standardised units. That size of deposit would raise a note of caution with me.

I still think the marriage problems are relevant - buying an ex-wife out of a business and arguing about finances is hardly likely to be cheap! One way of doing it could be to fold the existing business.

It's based on the contract value not in how much you have paid so if the contract is £33k even if you have only paid £10k you won't be covered.

At least that's how it reads to me.

My 'ahem' was just meant lightheartedly. I pointed out the maximum price of £30k and then almost immediately after me two other posters did exactly the same -

If you go to a bank and ask for 22k in cash, be prepared for some questions that they are obliged to ask under the money laundering regulations.

You may also get involved with the Revenue people if they think you have conspired with him and his staff to avoid paying tax on that money as undeclared income. You must have receipts for it to protect yourself.

Also, don't forget there is nothing to stop him going bust halfway through the job... I don't know why you think he would neatly go bust before he's gutted your kitchen and disappeared with all your old appliances.

I also don't think a credit card company would fork out £22,000 without question. They would probably be very interested in the details of that particular transaction, so your paperwork would need to be watertight. Not something I would be willing to risk without proper legal advice.

Okay FoolsandJesters , thanks for clarifying that, I was thinking if you were implying I was a troll I was going to go metaphorically troppo with a machete because this is stressing me out big style - I really want to use him, I really don't want to go back to scratch, but it is raising some flags with me, even though the exact same terms didn't in the past, simply because of the scale of the job it is such a large amount of money.

I would like to reiterate at this point if I do go ahead with him it will be with a brand new contract for supplying building works to the maximum value of £22k plus VAT. At the point he is ready to start and has all the goods, I would sign a new contract for building work and installation. And I will check that I am covered with someone legal before going ahead with that arrangement. But I'm not sure whether I will or not. And I will be having a frank discussion with him about it first and may ask him some uncomfortable and crucial questions. Like I say I did have a brief discussion with him yesterday about it and it seemed reasonable at the time but obviously since then I've been mulling over the sheer amount of money and the fact that he owns the stuff not me in the meantime and that's not sitting right with me.

I suspect he doesn't have a big enough cash contingency. Even if he did, I do understand that he doesn't want to risk it by ordering bespoke cabinets he can't send back and can't use in his showroom (something having a credit agreement wouldn't cover him for). But that's only one element of it (there is loads of stuff in the list of materials, Amtico flooring, quartz worktops, American style fridge freezer, range oven, electric wine cellar, integrated dishwasher, that kind of thing). I get the simplicity of having my cash aside for everything he needs...paying cash at the time, not having to pay invoices later, not having to keep track of what he is owed from me and pay himself back, all of which takes time. Just Tatty's cabinets need to be ordered today, done. Tatty's worktop needs to be ordered today, cash, done. That kind of thing.

If nothing else he will be losing business with this policy so he might want to get with the program and operate more in the fashion of his competitors...

Roundabouttown anyone can go bust at any point. That could happen with any company. How do you guarantee that won't happen when you get building work done? You take the risk. At least at that point you have your goods on site that you have paid for. I will have paid no labour costs until the job is completed, so I'd just have to engage another builder I suppose if that happened, whoever I end up using.

I wouldn't be putting £22k on a credit card either - as stated above I would be putting £2k and the rest bank transfer.

Sallyingforth I did clarify when he said cash he didn't mean a wad of notes, he meant bank transfer. So I won't be going into a bank. I meant cash from the point of view as not credit card, so no protection.

This is normal business practice for him you've done it before and you trust him. I would pay on credit card and pay the charge myself again normal business practice. Kitchen units cost a bomb and usually have to be paid upfront. My new kitchen cost around £12,000 with no labour charge as we fitted it ourselves we paid 75% deposit, £9,000, it's normal to pay upfront for bespoke.

Yes, anyone can go bust, but you don't take the risk, having done your due diligence, on the person it is most likely to happen to! Also, does he actually bring all the materials onsite? Or only bring the ones he needs that day?... It's not actually that easy, if he goes bust, to get your hands on the materials he has in his possession, even if they are, technically, yours. You'll have to go through the administrator, they might be "lost" etc. And if they are legally his materials, obviously you'll never get them, but will have to waste time ordering them again!

I'd definitely pay for the large electricals yourself then. Simple and designed for consumer purchase. Fridge freezer in particular not time critical and could even be installed by anyone else after the fact, and will bring your total below 30 grand.

Could the issue be that its so high spec?

Presumably he hasn't got an account with the German company providing cabinets? therefore he will need to pay all of that upfront?

I would shop around. (I recently got a £22k kitchen for £10,880).

OP don't take the risk, no matter how good he's been in the past. If the project runs over in time and money you will be obliged to fork out to finish the job and you will have no comeback if anything isn't done right.

Really, really unwise move.

There are lots of good builders in the world, if you're in London PM me I can give you the name of an excellent firm I've used for years.

I don't understand why he needs to buy the appliances Ovens, dishwashers, fridge freezers etc. Easy to order and pay for yourself. It all seems unnecessarily complicated.

Furthermore I think splitting the contract so £22k is covered by the credit card isn't going to work. The total contract value is £33k. There's nothing to stop the credit card investigating, claiming you've fiddled the paperwork to make sure it's covered and refusing to pay on this basis

HandsoffGary he does have an account with the German cabinet company, but if I were to pull out of the job having given him no money, and he's ordered them with his money, he can't send them back. They are bespoke. So whilst he has an account, they would have be be paid for regardless eventually, and it would be by him not me if he had no deposit from me, in the event of me changing my mind.

With appliances however, yes, I could supply these. In a way I'd rather he did, because it's easier to go back to the retailer if an appliance goes wrong. In addition, say my American style fridge freezer explodes and leaks water everywhere and ruins my Amtico floor, for instance, I'm covered for the lot including fixing the floor if he has supplied everything, whereas if I've bought it myself, I can faff about contacting the person I bought it from for a replacement or repair but the floor is my problem.

One of the bathrooms he did the radiator had some sediment in in that eventually settled into a pipe about a year after. To fix it, he had to take it off, remove the blockage, which involved ripping into a tiled box underneath, and then he had to re-tile the box.

If I'd have bought this radiator myself, I'd just have to ring them up for a replacement, but the tiled box would have been my problem.

So there's a lot to be said for doing everything under one umbrella from a sale of goods point of view, particularly with this kind of stuff.

I'm thinking I'm probably going to tell him I'm not willing to pay more than 25% deposit up front, which is far more usual having done a search around, and in line with other quotes I've had. I totally understand him wanting cash up front for the cabinets which cant' be returned. He'd be absolutely daft not to.

But in addition, I still need to be covered under consumer credit. At this point I don't have a "contract", I've just had a quote. I haven't signed or agreed anything at all. At the point it comes time for a contract, it will be for supply of goods only or I need to find a way to get it under 33k, or both.

Seriously -just pay the £600 odd credit card surcharge.

It's normal to pay for bespoke units upfront because they can't be returned but if the total cost is 33 22 isnt only the units is it?

I reckon he must be wanting cash for things he won't even be ordering for months. Why buy a fridge now, when you haven't ripped out the old kitchen, let alone fitted any cabinets, rebuilt walls, sorted the plumbing, plastering, electrics, etc?

No Yseulte, it's all materials. Copper pipes, tiles, extractor fans, fridges, Amtico, everything.

I get that it's a nice simple way of doing things, but it shouldn't be my only option. He's going to have to take it in stages. He's going to have to agree to me giving him the money for the cabinets up front as deposit, and taking the rest along the way. If he can't agree to that, I will have to use someone else, which is gutting but there must be a way, if he wants this job. He's going to have to understand. And I wont let him play the "trust" card either, because trust goes both ways, so if he wants money upfront for cabinets, he's not completely relying on trust either, is he. It's a two way street! And I do trust him, but it doesn't mean I'm going to agree to such unusual terms, no matter how simple and convenient it is for him, if it leaves me at risk.

As an account holder, I expect he gets a good discount from the supplier, OP. Is he passing any of the benefit of that on to you, or charging you the advertised brochure price?