Qfyilyi

I recently heard about a construction contractor who's building a house for someone, and this contractor wants the client to open a checking account with the contractor's name on it so that the contractor can use that account to pay for building expenses. I assume the money in the account would come from the client (some kind of cost-plus contract?).

This sounds super sketchy to me. Is there any legitimate reason for doing this instead of just invoicing expenses?

While a traditional checking account with the contractor's name on it sounds a bit off, it's not uncommon for private contractors to leverage a construction escrow account for larger projects like building a house. This enables a situation where the contractor can get paid for their time as work progresses and doesn't have to pay for materials out of pocket and wait for reimbursement from the client.

This may be what the contractor in this instance is intending, but an escrow account would have a third party managing release of funds, which is safer than the client owning an account and giving the contractor the ability to draw from it at will, since that could lead to overdrafts and other issues.

If this is all 2nd hand information maybe there is some communication breakdown, but otherwise it sounds like the contractor is either ignorant of industry standards for this type of arrangement or is trying to do something shady.

TL;DR: No.

There is no legitimate reason for doing this. It's trying to replicate the invisibility of a cash job with the convenience of not having to lug around briefcases full of cash, with the bonus that the person who opened the account has all the criminal liability.