What if a contractor stole $7,000 from you?
Real Estate Investor · Waldorf, MD · Member since 2014 · 592 posts · 320 votes
What if a contractor stole $7,000 from you?
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Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
7yAt the least small claims court immediately, at worst pay the money, hire an attorney, and go for the throat. In my state a protection order does not stop you from pursuing a lawsuit. look into the affidavit filed at the courthouse that gave rise to the peace order. Your contract is probably effectively broken since the lines of communication it has like sending notices by mail can no longer be done. You could claim the contract is void by virtue of impossibility as you cannot be trespassed off of your own property. Consult a local lawyer as your laws may differ from those in my state.
33 Replies
- Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes7y
At the least small claims court immediately, at worst pay the money, hire an attorney, and go for the throat. In my state a protection order does not stop you from pursuing a lawsuit. look into the affidavit filed at the courthouse that gave rise to the peace order. Your contract is probably effectively broken since the lines of communication it has like sending notices by mail can no longer be done. You could claim the contract is void by virtue of impossibility as you cannot be trespassed off of your own property. Consult a local lawyer as your laws may differ from those in my state.
- Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes7y
UM, I WOULD PUT IN MY LESSON LEARNED NOTEBOOK
1. "Keep an eye on them" as a recommendation does not mean the guys have a great body and are hot and gorgeous while they are working. It must mean they are sneaky little bast...
2. You get what you pay for. Cheapest bid is not the way to go. Best recommendations for QUALITY of work, ability to work within the bid amount, ability to follow a schedule, honesty and character are the basis of any contract.
------------------------
Under the new action plan I would:
1. Breach the contract as they 'ain't gonna do the work'. They got the money and are gone with the wind.
2. Hire someone based on the items listed in 2 under lessons.
3. Follow the order's process to request the court/judge to get your money refunded since they never did any work. And consider myself very lucky to see a penny. Maybe search court records as they likely make a living doing this scam. Might help you in court.
- Los Angeles · Member since 2018 · 466 posts · 471 votes7y
This sounds way too detailed to be merely hypothetical.
But anyhows, to answer the question, I'd have to say BOTH. Yes, it would push me away AND make me stronger. But I wouldn't stay away forever. Eventually, you have to recognize that, yes, there a lot of bad people out there waiting to ambush you for whatever you've got, but there's a lot of good people too. Odds are reasonable that if you try to accomplish anything in life, you're going to meet a good cross section of both.
So, it's made you stronger -- you sit back for a while, lick your wounds, cry into your beer, rebuild your asset base, then get back into the fray. More cautious next time -- maybe get TWO references, no matter how great the ONE was -- get a copy of the contractor's license and bond (what? no license? tsk tsk tsk) -- consult an attorney perhaps about writing a better statement of work (and even there, guess what? You need to TRUST your attorney!)
Then consider that if this is your first time out, and your luck is already horrible, hell, now you got no place to go but UP.
- Investor · Taylor Mill, KY · Member since 2016 · 2k+ posts · 964 votes7y
@Account Closed This doesn't sound hypothetical....
"What measures would I take moving forward" - easy, vet everyone better, that is also what I would have done differently.
It shouldn't push anyone away, everyone makes mistakes, how we learn and move forward, or don't, is the difference between succeeding and failing.
- Real Estate Investor · Waldorf, MD · Member since 2014 · 592 posts · 320 votes7y
@Grant Rothenburger @Alvin Sylvain @Lynnette E. @Jerry W.
First of all, thank you for listening to my story. Very powerful stuff.
Few lessons learned:
- Never pay a large sum up front
- Vet a company much better
- Don't trust a wolf in female clothing
- No one hugs after a business transaction
- Check court records
- Never go with the cheapest bid
Once this hypothetical situation is over, I'm definitely going to provide more details.
- Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes7y
Sometimes just the act of sharing a problem with others helps. I don't know why, but it does. There are a lot of wise people out there that don't make these kind of mistakes. They are that way because they did stupid things and learned from them. It isn't magic. There are dues you pay to get wiser, some are more painful than others. I don't recall the exact situation, but Warren Buffet had a top executive that made a mistake and lost a huge amount of money. I believe it was well over a million dollars. Upon realizing the mistake he had a meeting with Warren and of course offered his resignation in hopes of being allowed to do so and not be fired. The surprise was that Warren Buffet did not want his resignation and seemed offended by it. The guy couldn't understand why Warren wanted him to stay after losing so much money. His reply was that he had invested over a million dollars in his education and did not want to lose that investment. He knew it was a lesson the employee would never forget and would make him much wiser in the future. There are often 2 sides to a coin. This may stop you from making a $100,000 mistake someday.
- Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes7y
In today's lesson we learn that cheap is not always cheap....
But on serious note if everyone comes in say 15k and this guy comes in with half that and same scope of work....red flag.
Let's be real, everyone only working to make money some how... If you aren't able to then they aren't going to show up. Now with a half priced bid..they either never intended to finish it or they're going to change order you to death.
Very rarley does a deal like that come up and if or when it does it's never with a new vender. Why on Earth would a stranger give you that deal, mark it up an make a better profit.
- Rental Property Investor · Central, FL · Member since 2016 · 950 posts · 821 votes7y
I don’t do flips so my buy and hold repairs are different. My payments are either after the work is completed or at a draw rate that is in my favor. It isn’t my job to cover their employees salaries. Just like it isn’t their job to cover my mortgage.
Looks like a hard lesson learned. Lawyer up and/or do whatever the law will allow you to do on your own to recover the money.
Best of luck and sometimes the hardest lessons are the ones that we can recover from. Learn and move on.
- Flipper · Friendswood, TX · Member since 2017 · 401 posts · 368 votes7y
20+yrs as a GC means 1000's and 1000's of trades- Here is my advice:
Hire someone (yes, pay them.) to make a scope of work for you. This could/should be someone who is accredited in inspections; at least. This is a great way to know 100% of what needs to be done, and how.Go online and research pricing in your area. *(you can do this before you even have a project) Go on local forums for the community you are working in and ask. "Hey, anyone know a good drywall person and what the going rate is?" People are very willing to tell you who to use, and who NOT to use. You don't' need to only ask investors, everyone who owns a home has work done on it at some point.
Once you have an idea of what your project will cost you, based on your newly formed list, you can break it down by trade or keep it as one large scope. Now here is a secret; find your trades online, or through referrals, and email them your scope, budget, pictures, and ask "can you do this" instead of spending days on the job site meeting (trying to meet) trades to bid your job. You know your budget, you know your timeline. Setting that and sticking with it is how you accomplish a "job well done" and stay on budget.
Look, I am a sucker for a sob story and a go getter attitude. I recently had a foundation company TRASH a project of mine. It happens, it never stops. You just need to learn to minimize the risk of it happening, and minimize the damage once you recognize its happening. You CANNOT avoid trashy people. You just need to not carry their garbage around with you once you've moved on.
(also, every person I have met that got screwed also was doing things "cheap")
*final note- I pay for what I want done. Retail. BUT, the people I work with often don't require me babysit them, or argue with them. They show up on time, do good work, finish when they say, and clean up when they are done. Its worth the money because it saves me time, and money every single time. Plus, less stress. - Flipper · Friendswood, TX · Member since 2017 · 401 posts · 368 votes7y
On the "down payment"
its not your job to pay for their operating expenses, but its not their job to finance your project.
happy middle is 2 phased-
1. Pay for all materials and arrange to have them onsite. Anything over that is the trades responsibility.
2. Draws based on completion of work. Line item each thing as to make paying for what is done is easy and non-disputable. i.e. not 100% done, then not paid.*always make sure that its in writing that ALL change orders or additional work will be in writing before its started. This will avoid the "Well we had to so...."
- Real Estate Investor · Waldorf, MD · Member since 2014 · 592 posts · 320 votes7y
@Account Closed but not being knowledgeable will caused me to make the wrong decision. See that low bid got me pumped!!
- Real Estate Investor · Waldorf, MD · Member since 2014 · 592 posts · 320 votes7y
@Jerry W. I remember hearing that from the BP podcast. Love that story. Thanks for the refresher.
- Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes7y
Originally posted by @Account Closed:
20+yrs as a GC means 1000's and 1000's of trades- Here is my advice:
Hire someone (yes, pay them.) to make a scope of work for you. This could/should be someone who is accredited in inspections; at least. This is a great way to know 100% of what needs to be done, and how.Go online and research pricing in your area. *(you can do this before you even have a project) Go on local forums for the community you are working in and ask. "Hey, anyone know a good drywall person and what the going rate is?" People are very willing to tell you who to use, and who NOT to use. You don't' need to only ask investors, everyone who owns a home has work done on it at some point.
Once you have an idea of what your project will cost you, based on your newly formed list, you can break it down by trade or keep it as one large scope. Now here is a secret; find your trades online, or through referrals, and email them your scope, budget, pictures, and ask "can you do this" instead of spending days on the job site meeting (trying to meet) trades to bid your job. You know your budget, you know your timeline. Setting that and sticking with it is how you accomplish a "job well done" and stay on budget.
Look, I am a sucker for a sob story and a go getter attitude. I recently had a foundation company TRASH a project of mine. It happens, it never stops. You just need to learn to minimize the risk of it happening, and minimize the damage once you recognize its happening. You CANNOT avoid trashy people. You just need to not carry their garbage around with you once you've moved on.
(also, every person I have met that got screwed also was doing things "cheap")
*final note- I pay for what I want done. Retail. BUT, the people I work with often don't require me babysit them, or argue with them. They show up on time, do good work, finish when they say, and clean up when they are done. Its worth the money because it saves me time, and money every single time. Plus, less stress.Solid info.... to piggy back off the bottom thought. There's typically two schools of thought on how to evaluate costs:
LPTA: Lowest Price, Technically Acceptable. This usually works best for something that's mass produced and has a predictable lifespan. Now, you might say there's hardly anything like that.... and you're correct. There's many things that you can buy a better quality version of that will either perform better and or last longer.Which brings you to.....
Best Value: Which is exactly what it sounds like. If something for example costs 2x as much but last 4x as long....... it would make more sense to buy the more expensive item less often...
Both these are even more critical when dealing with trades/people. Sure you can cheap out and go with the craigslist special and maybe for some jobs that's ok or makes sense. But if you have a deadline, multiple jobs, or just short of time... you gotta pay to play.
- Rental Property Investor · Baltimore, MD · Member since 2014 · 247 posts · 321 votes7y
@Account Closed even though we haven't worked together before, you gotta understand great GC's are really busy. The scope you would have paid $250 dollars for, is almost a roadmap into the mind of a reliable GC, it shows the breakdown of prices. Gurus charge thousand for that same info. Hopefully we can work together some day.
- Contractor · San Diego, CA · Member since 2018 · 432 posts · 221 votes7y@Lamont Marable A contractor should not be able to bill you for work they did not have in writing with you. Also, a contractor shouldn’t take a deposit for over $1000. Progress payments are made upon delivery of materials and labor. It’s best to have a contractor do something small for you first, and if they faithfully do that, then have them progress to do more. I typically don’t take any deposit money anymore as a contractor. There’s usually many phases to construction, so I’ll ask for payment upon completion of each phase such as painting walls, drywall installation etc, or near the end of the week when I need to pay guys, but my work stays ahead of the customer’s payments. The customer (you), comes first and the contractor is there to serve you, so he should never have the upper hand on your money! I think the best model for sfr remodeling is keep a diligent relationship of progress payments, so your contractor feels good that he will keep getting paid and you feel good that he’ll keep doing what he says. You should be able to ask your contractors to receive payment as work progresses, possibly on a weekly basis, or upon completion of phases. Many phases of residential construction such as painting or drywall don’t take much more than a week or two.
- Flipper · Friendswood, TX · Member since 2017 · 401 posts · 368 votes7y
If contractors advertise "Free estimates" they aren't very busy, and just because they charge for a scope/budget doesn't mean its accurate. I would suggest hiring someone who is non-biased; estimators are contracted by large firms, including GC's, all the time. hire a private claims adjuster. They know how to find every little thing and know what stuff cost to get done, but you should always be able to get it done for slightly less (10%).
Its more work to "set up a team", but holy cow is it an amazing feeling to have a routine to most aspects of your business. If you have a plan, you can get others on board.
- Flipper/Rehabber · Salt Lake City, UT · Member since 2018 · 31 posts · 12 votes7y@Lamont Marable I am so sorry to hear about these hypothetical woes. The good news is that you’re taking steps toward wealth. You’re takIng action! I wouldn’t let this push you away. The biggest mistake I ever made was to get scared away by a flip gone wrong in 2008, and miss some of the best buying conditions in our nation’s history. Lesson learned, keep pushing forward :)
- Real Estate Investor · Waldorf, MD · Member since 2014 · 592 posts · 320 votes7y
@Ian Barnes WE WILL! No doubt. Once this one is all ironed out and my next one comes through then I'll be giving you a ring. Thanks Ian!
- Real Estate Investor · Waldorf, MD · Member since 2014 · 592 posts · 320 votes7y
I would have been way further than where I am if it wasn't for my dumbness and social media. I would have been seasoned for 5 years right now but nope I'm almost starting all over again. So I understand @Stanford Neal Mead only if we could have bought a crystal ball from Amazon back then, SMH.
- Flipper/Rehabber · Bronx, NY · Member since 2016 · 168 posts · 168 votes7y@Lamont Marable first mistake “cheaper!” cheaper generally means “get ready to pay twIce as much as you would of wIth the better, although, a bIt more expensIve . Quality vs. quantity sometimes makes a huge difference to your rehab and your wallet in a Unfortunately negatIve way . Been their myself, great lesson learned! It’s a random hypothetical question to ask unless you are in that situation, which many of us have been.
- Investor · Jonesboro, AR · Member since 2017 · 136 posts · 79 votes7y@Lamont Marable People like that won’t last long tell everyone you know. Call him out small claims. I know people from 20 years ago had a bad wrap they aren’t in business anymore and everyone still knows what they did. Probably has a ladder tied to top of a mini van lol
- Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes7y
@Account Closed it sounds like you have learned lessons from this. That is the most important thing. Learn the lesson.
I never heard of a "peace order" What is that?
I would be talking to an attorney right away. $7,000 is enough (but barely so) for a collections attorney to take it on contingency
- Rental Property Investor · Amityville, NY · Member since 2018 · 351 posts · 441 votes7y@Lamont Marable You actually hired a very competent "con man". This guy new exactly what he was doing and how to do it flawlessly. Sucks that in todays times we cant just trust someone to do what they say. With that said all of the ways to avoid this in the future have been mentioned in the previous posts. But as a contractor myself make sure you 1-have a detailed contract with scope of work, payment plans, time schedule and exit strategies. 2-a payment plan in the beginning of the project that either side is ever really at much risk. (The contractor worries about getting paid just as much as the client worries about getting screwed over). Start with multiple small draws for small amounts of work. NEVER PAY TOO FAR AHEAD. A common ground has to be met but can be done with minimal risk. 3- Get 3 quotes for every job. Get them from people who have used them and would happily recommend them. Then compare based off other metrics not just price. As others have said paying more for someone competent will many times save you time, money and hassle. I recently went through this with a plumber. What took other plumbers days to do with aggravation and mistakes my new plumber who is more expensive would get it done in 1 day and done correctly. 4-with all new hires, keep them accountable. Check up on them, phone for updates etc. Once you build a relationship then you can stop the babysitting. Lastly- please go after that POS as hard as you can and fight for more money then he stole for you. Your def not the first person hes done this to. Good Luck
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes7y
Buy a property to rehab etc. where the price is at a point where you can hire the best and it still pencils well. If you have to get great work done at a fraction of a price to make a project viable then likely the price is too high.
More often there is a reason people are cheaper on estimates. They might start low then layer on tons of additional fees that end up higher than someone else. They might have lower fees due to inferior tools or abilities. ( Talking in generalities and not this specific situation.)
I do not look for cheap I look for VALUE. Cheap can be a Mcdonald's hamburger. Value can be eating at Cheeseburger Bobby's for slightly more money. The key is finding quality work at a decent price. If a contractor starts to do good work at a decent price eventually they likely will be flooded with business and up prices (supply and demand).
Read J Scott's book on here from 123flip
- Real Estate Investor · Waldorf, MD · Member since 2014 · 592 posts · 320 votes7y
@Ned Carey If someone was harassing, beating, or a threat to you, you file for a peace order through the courts. In this hypothetical situation, the person filed a false claim to hold on to this large amount of money in hopes that no one would not fight back as some people don't want to get involved with the legal system, but little do they know there is a legal team lined up like the steel curtain.
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