DIRTY LITTLE SECRET #6: Collect A Deposit Up-Front
Just like with roofers paying the deductible, Colorado SB 38 governs this detail, too. Roofers are not allowed to collect money up front from their customers before materials have been delivered to the property. If a check is collected, it must be held in trust by the contractor until materials are on the property. At that time, the check may be deposited into the contractor’s account.
The reason for this has been shown in several local news reports where they talk to homeowners who gave a roofer their initial insurance check or their own funds as a material deposit, and then the roofer never showed up to do the work. Many people have been getting ripped off – their deposit money has been taken and then no work was ever performed and no materials were purchased. A couple of years ago, one “roofer” collected over $500,000 and then disappeared! That’s why this provision was written into SB38 – to protect homeowners. The problem must be, however, that most homeowners don’t know about this law because we still hear stories about homeowners who have signed over their insurance checks prior to any materials arriving at the property or work being done.
The bottom line is that if a roofing contractor wants to collect a deposit payment from a homeowner, he must have delivered the materials first. Or he can demonstrate that materials have been purchased, collect the check, but hold it in trust until the materials are on-site.