Many remodelers might regard payment by a financial institution as restrictive, another layer of red tape. Not so Bartelt/Filo, a design/build contractor in Menomonee Falls, Wis. Co-owner Rick Bartelt says that as the company's average project size has increased -- it topped $100,000 in 1998 -- Bartelt/Filo more and more often receives payment for completed work out of escrow accounts set up by title insurance companies acting as intermediaries for banks. "On projects over $150,000," he says, "we suggest it."

Typically, Bartelt says, the title company pays for the project in four draws. To collect, contractors fill out a contractor's affidavit and file year-to-date lien waivers from each sub and supplier. Independent inspection certifies the work as complete to date.

For contractors, escrow accounts ensure the money's there when the job's finished. For homeowners, they ensure that the job's on schedule and eliminate future legal action involving liens. California construction lawyer and author Gary Ransone says banks financing remodels set up such arrangements as a way of limiting their own risk.

Payment through title escrow accounts "scares a lot of contractors," Bartelt says, because "they think they're going to end up financing the job." In addition, contractors "used to getting 30% down and 30% on starting are definitely not going to like it," since the title company resists paying out before work begins. Bartelt/Filo typically demands 10% before the job starts "and we've stuck to our guns," Bartelt says.

Bartelt estimates that about half the company's projects are financed out of title escrow accounts and calls doing business in this way a natural part of growing. "If you plan out your contractors' affidavits right, you can survive going through title," Bartelt says. "And once you do, you'll quickly learn how to get good at it."