Contract agreement and fixed fee profit.

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AL - 25 Jul 2005 03:02 GMT

Hi there,
I have been asked by an investor to use my Contractor license to build a
multifamily project. Because this is illegal, I told him I can offer him a
construction management package, where I let him negotiate the contracts
with subcontractors that are approved by me; and I will provide him with
technical oversight and make sure things are done right. I have 3
questions:
1) Is this common, and legal?
2) If no, what would be the closest scenario to the one presented above.
3) How much (% wise) should I charge him?
4) where can I get a contract form to record this agreement.

Your advice is highly appreciated.
AL

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Tom Cular - 25 Jul 2005 10:55 GMT

The legality depends on your local jurisdiction, i.e. even if you act as a
construction manager for fee, there may still be a requirement for the
contractor (s) performing the work to be licensed. Yes a PM/CM for a fee is
a common arrangement, usually on large projects to represent the owner's
interest. Sample documents can be obtained from the AIA [Agreement Between
the Owner and Construction Manager]. Fees depend entirely on the scope of
services you will provide as well as the size of the project and vary over a
pretty broad range.

Tom.

> Hi there,
> I have been asked by an investor to use my Contractor license to build a
[quoted text clipped - 10 lines]
> Your advice is highly appreciated.
> AL

Reply to this Message

BP - 25 Jul 2005 14:58 GMT

You should be talking to a lawyer.

The licensed contractor is ultimately responsible for the compliance to
codes for the project. The more managerial control you give up to the
investor the more you allow them to take liberties with your good
reputation.
The legal liability issues inherent in this kind of arrangement can be
negotiated, and you may even be able to obtain a "hold harmless" clause in
the agreement to protect you and your heirs from any damages incurred over
many years, but this is a complex area of contract negotiation.

You should be talking to a lawyer.

> Hi there,
> I have been asked by an investor to use my Contractor license to build a
[quoted text clipped - 10 lines]
> Your advice is highly appreciated.
> AL

Reply to this Message

P. Fritz - 25 Jul 2005 16:08 GMT

> Hi there,
> I have been asked by an investor to use my Contractor license to build a
[quoted text clipped - 10 lines]
> Your advice is highly appreciated.
> AL

You would consider letting someone else "use" you license?????

All I can say is.............................Are you NUTS?????

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AL - 27 Jul 2005 03:10 GMT

Thank for the advice from all. I am in the process of contacting a lawyer.
Also, If the terms went as I wish (i.e., construction manager that will
approve the selected subcontractors, and approve their work), I intend to
charge the owner $3-$4/ft^2. The project is about 20,000 ft^2 covering 12
identical units (multifamily project). What do you think..

As for P. Fritz post:
I won't let any one "use" my license. That is why I am seeking your advice.
The easiest thing to do is just to do "nothing" and loose a good earning.
On the other hand, the craziest thing to do is to let him "use" my license
and then running all the risks associated with it (including losing my
license). I wanted an alternative that provides for a manageable risk and
hence some earning.
thanks for the advice..
AL

>> Hi there,
>> I have been asked by an investor to use my Contractor license to build a
[quoted text clipped - 15 lines]
>
> All I can say is.............................Are you NUTS?????

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Phil Scott - 30 Jul 2005 06:28 GMT

> Thank for the advice from all. I am in the process of
> contacting a lawyer. Also, If the terms went as I wish
[quoted text clipped - 3 lines]
> covering 12 identical units (multifamily project). What do
> you think..

50 to 80k, if the job is takes 3 months, thats high..if it
takes 6 months full time then its close... I think your
terms might be high as you shouldnt be spending too much time
on a small project like that. two months full time spread over
4 or 5 months maybe.

Phil Scott

> As for P. Fritz post:
> I won't let any one "use" my license. That is why I am
[quoted text clipped - 35 lines]
>> All I can say is.............................Are you
>> NUTS?????

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Homeowner Forum / Construction / July 2005

Contract agreement and fixed fee profit.