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AIA Small Project Design (SPD) Knowledge Community supports, celebrates, and promotes small projects by engaging designers and the public.

  • 1.  Refunding contract fee deposit.

    Posted 07-25-2021 12:04 PM
    Does anyone have language in their standard contract for a renovation project that deals with refunding a client's deposit When the contract is terminated by the client or architect? Should the client be in titled to a refund after schematic design is completed and the architect has fully committed his firm to the project. We are a small firm with limited project volume.

    Robert Marrapodi
    Marrapodi Architecture
    21 E. Market St.
    Third Floor
    Rhinebeck NY 12572
    T. 845-876-0733
    M. 845-849-4540

  • 2.  RE: Refunding contract fee deposit.

    Posted 07-26-2021 05:40 PM
    Ideally your contract would have language describing the deposit as “non-refundable”, unless perhaps if the contract were terminated before you began work on the job. That seems to me how the concept of a deposit works, but if it’s not described that way in writing you may have a hard time holding to it.
    Further, It would seem to me you should be able to bill for as much work as you performed before the contract was terminated, even if it’s more than the amount of the deposit.

  • 3.  RE: Refunding contract fee deposit.

    Posted 07-26-2021 07:33 PM
    I do not have such a clause in my standard contracts and I don't see what would justify it. As you say, Schematic Design is done. You have a right to be compensated for that effort.

    Daniel Alter, AIA

  • 4.  RE: Refunding contract fee deposit.

    Posted 07-27-2021 08:13 AM
    I try to use "minimum contract sum" or "retainer" instead of "deposit" and definitely state that it is not a refundable fee.  That being said, for a small residential client that hasn't inconvenienced me, I may give some of it back if I feel that it was fair to do so, but I'm not contractually obligated to do so.   My contract also says that if either party terminates, I have 7 days to send a final invoice for work done - as there is some time needed to close out a project or pause a project properly in case it ever comes back to life.

    Brian Viehland AIA
    Principal Architect
    Design on the Square

  • 5.  RE: Refunding contract fee deposit.

    Posted 07-28-2021 06:40 PM
    The language I use is "nonrefundable initial payment" and credit it to the final invoice.  If the project is terminated early, I have money in the bank to help negotiate any final payment.  I don't use it with good, repeat clients who have established a good relationship.

    Sent from my Sprint Samsung Galaxy S10+.

  • 6.  RE: Refunding contract fee deposit.

    Posted 07-28-2021 08:22 PM
    AIA B105 says
    "The Owner shall pay the Architect an initial payment of  _____ ($___) as a minimum payment under this Agreement.  The initial payment shall be credited to the final invoice."
    I add "The initial payment shall be the minimum payment due the Architect" and "The final invoice shall be submitted after Occupancy Permit".

    So, the initial payment is mine to keep, and I get to bill for what I've done up until the end of the job before I have to reduce a bill by the "deposit" amount.  If the Owner never gets an Occupancy Permit inspection, I might not have to do that reduction.

    Then it is my job to be sure that I bill regularly when I've done some work on their job.

    In the bigger-scope AIA Owner-Architect Agreements, the standard text provides for payment of "termination expenses" if the Owner pulls out.  These are to cover reassigning staff, records wrap-up, etc.and I think those agreements state that.  Might even have text about paying for some of the expected profit that is lost when the job dies.   Many Owners of such bigger projects x-out that part.

    I also tell Owners that I need to see both the signed Agreement (I will accept a cellphone photo of each page) and have the initial payment check in hand before I seriously start work.  They almost always end up printing a copy of the Agreement and mailing it with the check.

    [Separate topic, but I haven't yet gone to online payments and tell Owners  would rather not have to markup my fees to cover the bank's handling charges for online.  I *could* accept a personal on-line transfer, but prefer to not mix business account with personal; that's why I pay myself with draws.]

    "Deposit" and even "retainer" (to me at least) don't sound as hard and fast as "payment" to me.  If someone is willing to make a payment, it says that they are putting some value on my services.  "Deposit" has a bit too much suggestion that they might get some of it back if the project is abandoned.

    I don't charge separately for an initial site visit and project discussion.  I generally agree with the idea that people should expect to pay for something they value, that I should value my time too, but so far I haven't implemented that.  I am moderately surprised when clients ask me if I need a check for the time we just spent together.  However, for the tire-kickers, maybe telling them "I can come and spend some time with you next week, have a $XXX check ready" would leave me a bit more time for the people who are already paying me to do their job.

    Joel Niemi AIA
    Joel Niemi Architect
    Snohomish, WA