Can a home improvement contractor charge a home owner $18,000 for something that he sub-contracted out for $10,000?

Is there a law that restricts how much he can increase the subcontractor’s bid?

Asked on September 1, 2011 under Business Law, Wisconsin

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

You need to carefully read your home improvement contract with your home improvement contractor in that its terms and conditions control your obligation to him or her and vice versa in the absence of conflicitng state law.

Most contractors make additional money on their contract for profit, overhead and supervision of the subcontractors on the job. The contractor typically makes a bid for work on a project of improvement for a stated amount that takes into account estimates and bids of the contractors. The homeowner either accepts the bid or rejects it as a whole.

Many times a contractor will significantly mark up a subcontractor's bid to him or her as part of the contractor's overall bid to the homeowner. This is what seems to have happened in your situation. The contractor can charge a homeowner $18,000 for an item he subcontracted out for $10,000 if the homeowner agreed to the overall written estimate and bid submitted by the general contractor.


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