Investor · Miami Beach, FL · Member since 2014 · 123 posts · 19 votes
My contractor has gone above and beyond on overages, both time and cost. Now he's demanding I pay his subs that I already paid him for, or he won't call for final inspections. I've had enough of him. Is there any way I can do the final inspections myself, or hire another contractor? What's the best way to proceed?
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
10y
We don't know why there are overages. Is it because the scope was not complete, and additional work beyond the original contract had to be performed, or was the work was just more difficult that the contractor anticipated? I'm guessing the former.
I had a developer who has built several subdivisions tell me that he has in the past used a title company with the construction funds in escrow to where the payments to the GC and/or subs were handled by a third party according to the instructions given to the title company.
I did not ask him for the details but apart from the extra expense, this sounds like a pretty iron clad way to handle payments as well.
I imagine in this case, the title company would have the Contractor Agreement/Contract and any other addendums on file and no disbursements would be made until the payee (GC and/or Subs):-
Have their entity paperwork on file with the title company to ensure that they are legally operating
It would force the designated and authorized payee that would sign the check to show up with picture ID
It would force them to not only sign the lien waiver but have it notarized as well before the check is released
Do you have any experience with this method or know anyone who does it this way?
Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
10y
Anthony M. Those are pretty standard in my line of business. When you go beyond your homeowner and investor, pretty much commercial and government contracts are like that (no title company involved, but the process is the same). I don't have to show up with ID to cash a check, but I do send a minimum of 8 pages of paperwork per billing. Half your assumption is correct, half are unnecessary or doesn't work. With that said, there are several levels of formal bidding, and the more complex it is, the more you are likely to pay, the more formal your contractors will be though; to a point where owners/clients will not check our work and simply sign off on the project.
Real Estate Investor · Boston, MA · Member since 2009 · 2k+ posts · 542 votes
10y
@Ray S. I'd let everyone (GC, Subs) know what's going on (suing GC, advising the Inspections department). Find any projects the GC is working on and advise anyone s/he's working for that they'll be enjoined in those suits.
Then hire Subs/Labors/Licensed to request inspections Contractors in specific disciplines and pay them weekly to finish the job while you Oversee/Project Manage the job.
Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
10y
As someone who doesn't hire a GC, how much leverage do you have choosing subs? If you hire a GC at $50,000, and that $50,000 is the price with his preferred subs, how do you proceed? Do you ask for his sub list, and then determine it is good to go, or discuss if you want him to use someone else? What is normal protocol for a residential flip?
Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
10y
Brian Pulaski At initiating the contract, you can incorporate that the GC must disclose all the subs in a form you will provide (pretty much just a list with names and license numbers), and he will not be able to change the subs unless written approval by you. This is all done in my government and most commercial jobs, therefore I know the owner can have full control over what the GC can do.
John Anderson You THINK, you DON'T KNOW. That's a big difference. And I am telling you, you CAN control who they hire.
Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
10y
@Manolo D. that is always how we did it as commercial GC. Unless we had to submit our subcontractor lists (for each trade we has to send the owner our choice and the next two bids) for their review and approval. However the caveat we had was if the owner didn't want to use our preferred (lowest qualified), they had to pay the "premium" for the guy they wanted. I wasn't sure if this is how a residential job was run as well.
Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
10y
@Brian Pulaski Haven't encountered something like a 3 sub system. We do have to give our clients a list of subs that we are going to use, just for legal reasons, leins and payments to be exact, one sub is all they need, if the gc wishes to change it, gc needs justification on why and who, have done it a couple dozen times. My clients won't pay for premium either, nor i think they should, you are the gc, you know your sub, if they elect their own sub, then I pluck it out of my contract then they manage it, haven't encountered it.