I'm a newbie and almost burned my entire saving - Rehab Screw up
Hi Pros,
I have used most of my life saving to purchase and rehab a house in the state of Georgia.
I live in different state - and i have a contract with contractor for rehabbing the house where the agreement is I provide I buy the materials and I pay for labor.
The contract was not detailing the entire score (item by item - my biggest mistake )
but the contract was 50% of labor to be paid at the start and 50% at completion.
I have been following the progress over the phone and being sent some pictures about the project, but the contractor asked for the rest of the payment claiming that the project is finished and almost ready for tenant walkthrough and he needed the cash to finish the final stroke of work and pay his people.
Once I paid the entire amount the contractor vanished and stop answering my calls and turn out the work is not close to completion. He txted me saying he can not complete the work as per our contractual agreement I should be providing the City Permit if needed and i haven't provided the work permit and for that reason he can not complete the work. (we never talked about this house needing a city permit before).
I am currently paralyzed by what happened as it is my first rodeo in this deep hole and stuck -
Now, It is a dead-end with this guy as he is really a scam artist who intentionally steal money.
but what is the best next step that i could do - file a lawsuit and go to the legal system, or just focus on closing the rehab with another person .... and if I would sue the person would I actually get anything out of it or my time would be a waist....
sorry if i sound like rumbling - but any advice would be appreciated.
Sincerely
AA
i can't give any advice, but wish you good luck and i hope you can sort it out very quickly , to your advantage.
Guillaume
Thank you so much
Hello, i am not providing legal advice and just starting flipping business myself. However, from contractual stand point, if it’s not in the contract, the contractor is not accountable to cover the licensing and other way around. I always recommend checking with an attorney before executing any types of contract to include any protection clauses to prevent exactly these types of situations. I would highly recommend discussing this with an attorney to 1) review your existing contract and 2) see if you have any protections in the contract that would give ground for pursuing a law suit. I wish you the best.
You're in a pickle and I'm sorry that you are facing such a challenge on your first flip.
If I were in your shoes, I would book a flight out to Georgia this weekend to put my feet in the property, assess exactly what needs to be done to complete the job, then call every contractor in town until you find somebody who was willing to help finish the job at a reasonable rate.
It makes the most sense to get to the finish line at this point, because it sounds like you only have a week or two worth of work left.
Advice for going forward - Never give a contractor more money than the work that he/she has completed until you have a VERY good relationship with them and have established trust. Also, not a good plan to purchase a house to rehab out of state for your first deal.
You'll get through this. Make a game plan. Get focused. Stay calm.
Scott,
OMG - your words came in the right time, i really needed it.
Thanks a lot for your advice, i really appreciate it.
AA
I am a Georgia attorney/investor. If you need a referral to understand your legal options, I can give you some names. The advice about visiting is good. The builder may also have committed a crime you can report to the police, https://law.justia.com/codes/g... OCGA § 16-8-15. Conversion of Payments for Real Property Improvements. This post is not legal advice as I do not practice in this area and we do not have an attorney-client relationship. Good luck.
What happened now? What course of action did you take? Did you file a lawsuit or just completed the project?..
Thank you for sharing your experience. It is very helpful and the advise here..
I am in the stage of educating myself and saving for DP for my first rental.