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Refundable or Non-Refundable Retainers
- To: <seaint(--nospam--at)seaint.org>
- Subject: Refundable or Non-Refundable Retainers
- From: "Dennis Wish" <dennis.wish(--nospam--at)verizon.net>
- Date: Sat, 5 Jul 2003 17:07:33 -0700
- Cc: <cvsea(--nospam--at)structuralist.net>, <light_framing(--nospam--at)structuralist.net>
I have a client that
has paid a 40% retainer for the design of a custom home / with remodel. I
received his retainer a week ago with a letter from his partner agreeing to the
terms of my work agreement although I have not as yet received the signed
agreement. However, the letter was confirmation of the terms of the agreement I
sent. I confirmed receipt of the retainer and started some preparatory work
(ordering a Near Source and Soil Type report from the local Geotechnical for
example). I also spent at least ten to twelve hours of time prior to the receipt
of the retainer to discuss his design so as to identify the load paths and the
method in which I would approach the design.
After the first
visit with the client, he concluded that he wanted me to provide engineering
services. He impressed upon me that his partners who were not in the industry
were concerned with my lead times and the time it would take before they could
break ground. I told the client that I had two projects on my desk at the moment
and based on the current work load would be able to start his project in
approximately two weeks. However, I told him that I take work based on
first-come-first-serve. Once I receive his retainer and signed agreement, I
would place his project in the schedule.
It was implied that
by accepting his retainer I was placing him within a queue and would refuse any
other work that would interfere with starting and completing his project in the
order in which I received work. The only exceptions to this are; plan check
corrections and in-field construction problems that need immediate attention.
After I received the retainer, I had an offer to design a 12,000 square foot one
story light-framed RV storage facility. The developer wanted it done within the
same time period as the job I received the retainer for and I turned the RV
storage project down. I have created a network for our local engineers and to
accommodate the client with the RV facility, I went online and offered the
project to anyone who would want it. It was taken by one of our networked
My work agreement
does not indicate the return of the retainer if he should cancel the project. He
paid the retainer to insure a place in my schedule and I turned down other work
in the process. While I have time and expense involved I am not sure what I
should do regarding the reimbursement of retainer fee's. The retainer was
$3,000.00 and existing time and expense might add up to about $1,800.00.
However, I believe a penalty should be charged as I turned down other work to
protect his schedule. How much of a penalty is appropriate? Do you believe a
retainer is inherently non-refundable?
What are your
Dennis S. Wish,