Stand-off with contractor

[Michaela G.]

I suspect this is going to be long, so be prepared or close this up now - lol. I just want to add the nuances to give the right picture: 

I have a large lot that I've been trying to get subdivided for a year. I wanted to build and had a custom plan drawn by an architect. 2 houses. Went to all the meetings etc. Last condition the city set is that I have to have the sewer tabs installed and  a sidewalk (this will be the only section with sidewalk on that whole street  for blocks - lol). That's where the trouble begins. 

I called various plumbing companies for quotes to connect the sewers. They either didn't get back to me. One came out and then I couldn't get a quote, because people were out with covid and he kept trying to find someone else to give me a quote until I gave up. Another plumber that I've worked with gave a guesstimate, based on his hourly rate and what he thought he might find. Was in the 10-12K range. And everything had to get fully permitted anyway and the city no longer allows homeowners to pull permits, unless they live on the property. 

Here comes X , who I had met through BP some years ago and who also wrote on another local FB RE page. I wrote about my problem getting quotes and he offered that he could help. He's a licensed contractor. I took him up on it. Total was going to be about 34K. I only looked at the total and was just glad not having to deal with it, as I had some other things to take care of. Signed the contract. 4K upfront and then there was going to 25K upon substantial completion and another 4k or so at the end. I signed it. 

Took 3 months to get the permit. Finally they cut into the street a week ago on Friday and did the first sewer line this week Tuesday. The 2nd line on Wednesday. 

I happen to have a bunch of rentals half a block from there and had one turn-over renovation and one new tenant move in, so, I was around the corner every day. On Wednesday I stopped by and the Plumber there asked if I had hired X. I affirmed. He said that he doesn't like the guy and almost didn't come back that day. He's afraid that he wouldn't pay him and mentioned that he'd put a lien, if he didn't pay. He didn't have a printer and X wanted him to print out a form and sign in order to get paid. And that he had texted X the day before to bring the form wednesday morning to sign it and that X should call him about that form. I called X and he said that the plumber should call him, is he had a problem. I went back to the plumber and he said that X needs to call him, he wasn't going to. So, now there's an ego stand-off between them. 

X later (wednesday) sent me the 2nd invoice for 25K, payable this monday. I said that the sidewalk needs to be done or I wouldn't consider it substantially finished and that I'd need a release by the plumber to make sure that he doesn't file a lien. He argued that the plumber can't file a lien, because he signed a lien release when he paid him the downpayment. He also argued, that because the permit took 3 months to get that that would be considered 'substantially finished'. I disagreed and I had/have the feeling that he doesn't have funds to pay the plumber and needs my money to pay the plumber. I offered to split up the 25K into 2, so that he could pay the plumber or I'd pay the concrete company for the concrete. He refused. He wants the whole 25k and insists that that's what I agreed to and that the permit was so much work that it's substantially finished. No, it's not! We finally agreed that I'd pay the 25K when I see the sidewalk prepped and the forms all set for the pour. 

I stopped by Thursday and saw that the 2 sewer tabs were finished, the 1st one was all covered up and the blacktop was finished. The 2nd sewer tab was done and street still covered with metal plate and big chunks of asphalt from the street laying in the sidewalk area. I assume the plumber covered his butt to make sure he'll get paid and won't fix this without seeing payment. That means that the contractor can't do the sidewalk, as there's special equipment necessary to move the big pieces from the sidewalk area. Went back yesterday/friday and everything in same condition. Have not talked to the contractor and leave it up to him to contact me. He wants to get paid, but is not willing to split it up and I'm not willing to pay him the big chunk without it being substantially finished, as we had agreed upon. 

I don't necessarily think that X is a bad guy and is trying to run off with the 25K, but I think he doesn't have the funds to pay the plumber or the concrete and doesn't want me to find out how much his arranged quote with plumber or concrete company is. I think he boxed himself in, by refusing my split payment and now his pride won't let him back down or something like that. I'm sure he padded the different costs, but I'm not arguing that. If I contact the plumber directly and offer to pay him what he's due (as I don't want him to get screwed over) I'll still be under contract with X to pay him the whole.

I'd still be happy to split up the payment, but I'm not going to be the one contacting him. This is in his court.  He texted me thursday evening that the sewer was done and the permit signed off, but that the blacktop wasn't closed. I wrote 'ok'. The forms are supposed to be in place monday, so that I can pay him and the pour is scheduled for the 9th. I don't see that happening now. But I suspect this might end up in court, as I'll have a lien from the plumber and I actually have the lots under contract to sell to a builder, pending the subdivision. The builder has been patient with me, but of course we wouldn't be able to close with any liens or this being unfinished. 

What would you do? How long would you wait until you went ahead and paid the plumber directly and found someone else for the sidewalk and cut your losses on the contractor? My preference would be for him to finish, but I won't pay 25K when it's in the state it's in and he insists that it's 25k or nothing and I'd be in breach of contract, because he considers working 3 months on getting the permit and putting the sewer tabs in 'substantially finished'. I don't think a judge would see it his way. 

[Bruce Woodruff]

Wow, that was a long read....

Question - Who has the contract with the plumber, you or X? I assume X has hired the plumber as a subcontractor? That being the case, he is the one that must pay the plumber, if you get involved in this and pay the plumber, you are still legally obligated to pay X.

Stick to the terms of the contract. How does it define 'Substantial Completion"? It should have been specific, but sounds like it was vague? The devil is in the details of the contract!

You are correct in your stance as far as I can see. And your offer to pay 50% of the balance due is fair too (but I wouldn't do that, stick to the terms of the contract)..... And it doesn't matter how much work the Permit was, that was not your problem.

You need to stop avoiding X and send him a Certified letter requesting that he finish the sidewalk, and that immediately upon completion you will hand him a check for $25,000. Give him a few days and then have an attorney contact X laying out what your next steps are - which should be dramatic at this point.

[Michaela G.]

@Bruce Woodruff 

you're right in that Z has the contract with the plumber. I just don't think he has the funds to pay the plumber and thus we're at a standstill. I'm giving in by willing to pay half, but the alternative is that things aren't getting done at all and I'll likely lose my contracts/buyers. So, I'm willing to meet him partially to get this all facilitated. 

It's not so much that I'm avoiding contacting, but that he wants funds on Monday and he claimed he'll have the forms all in by then.Tthis is Saturday. He got mad at me for stopping at the site and even talking to the plumber (i have to drive down that street to even get to my other properties) and so, I'm trying to avoid for right now another complaint from him that I checked up on him. So, I'm leaving the ball in his court for now as he set the dates, which are coming up.

[Wayne Brooks]

@Michaela G. Well, state laws vary, but....I’d send certified notice to your gc stating your position along with the fact that you will be paying the plumber direct  for $xxx (get a written invoice from the plumber), deducting that from the gc’s contract, unless he provides documentation that the amount to the plumber is not valid, and/or an executed release from the plumber.

BTW, a waiver of lien, in advance, is not enforceable many states.

Maybe restate your offer to pay a portion, and if he refuses, you’ll terminate the contract as he refuses to finish the work as Originally contracted.

He will threaten to lien your property, don’t let it scare you.  If does actually file a lien, you can usually “bond it off” with a cash deposit placed in escrow at closing.  There are penalties for filing a false lien in every state.

[Scott Mac]

Vague contract terms come back to bite you.

Maybe ask an attorney what Substantial completion is under Georgia law, since it seems you did not spec it in the contract.

Just my 2 cents.

[Paul Merriwether]

Contact a cheap online attorney at justanswer (dot) com. Very affordable.