contractor is threatening to take me to court
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votesQuote from @Stuart Udis:
Can't you come together and figure out a solution where he returns and addresses your concerns and collects the $2K? Also, looking at the bigger picture, if this remains contentious, good luck getting him to come back to address any warrantable repairs etc. At the end of the day don't let pride get in the way of making the right business decision and that's a mistake real estate investors often make.
All good answers above, but here's a great answer ^^^^. Even if the guy is a jerk, he can still finish up for far less money than anyone else. And understand this - he may threaten you with court/liens, but he doesn't want to go that route any more than you do. It's time, money and stress for everyone involved.
Can you visit the jobsite one time and have a face-to-face meeting where you pay him $1000 and sign a note that guarantees he will recieve the final $1000 after completion? So much easier!
And you now know this, but never, ever, neglect to have a firm contract and SOW in place again. They exist for a reason....
20 Replies
- 1yGreg ScottPro MemberRental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
This is a tough lesson. I have learned similar ones in the past.
Realistically, he doesn't even need to take you to court to get his money. He can just put a mechanic's lien on your property and he will get paid when you sell. Since you have no contract, there is nothing that says you do not have to pay if you are not satisfied, and your spreadsheet would seem to indicate you owe him the money.
Similarly, since you paid him for previous work on the spreadsheet, and the spreadsheet shows you owe him for additional work, your argument is not very strong. He probably could take you to small claims court and win. Given you are out of state, it would be expensive to fly there. If you choose not to show up, he would almost certainly be awarded a judgement.
Of course, you could choose not to pay the judgement, but then he can send it to a collections agency and your credit score will be trashed.
I don't see a scenario here where you get through this cleanly. I recommend you pay him the final amount, but get a lien release, in advance, that says if you pay him this final amount, he will have been paid in full for his work and no further liens can accrue.
- Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes1y
@Marc Shin, yes he can take you to court! Anyone can make a claim against anyone else. Some things to think about:
1. You live out of state. So, what will be your cost to travel to defend yourself in court? The travel cost, time off work, etc. Will you need to pay a lawyer as well?
2. If you lose you not only have to pay the judgement amount but also the court costs! That is on top of your costs from #1.
3. If you refuse to pay, in many places the judgement could become a lien against your property and used to foreclose on it to pay the judgement.
4. You had a verbal agreement, which you have admitted to here.
Your contract is evidenced by the spreadsheet, payments, and likely other communication about the work. All you really need is a meeting of the minds about the work and "consideration" (payments) . All of that is proven with the spreadsheet and payments you made electronically.
5. It sounds like they did work after your last payment to them. How much work was done and what do you think that work is worth? How much different is that from what they believe its worth?
For example, maybe they believe they did $1800 in work, buy you believe they did $1200 in work and that there is still a punch-list of items that need to be done.
I would try to negotiate something like paying them $1500 and then negotiating an amount to go back and do the punch-list items which might be another $1000.
Yes, in my example you are paying a little MORE than you anticipated, BUT scopes of work are often not detailed enough to be 100% clear to all sides. One side can't be expected to just eat the vagueness.
In fact, when it comes to contracts, if there is vagueness the contract is to be interpreted in favor of the party that DID NOT write the document. So, if you write the scope of work in the spreadsheet and it is at all vague, it should be interpreted in favor of the contractor.
6. Next time get a real contract! If you are doing renovations that are more than cosmetic, you should be pulling permits and those generally require contracts because permit pricing is often based on contract value.
So, it sounds like you may be working outside the system which could eventually bite you. You could one day find yourself shutdown or with fines issued by the municipality. So, just beware that you want to look at how you are doing business not just for your own benefit in a situation like this but to protect yourself from other issues as well.
5.
- Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes1y
Quote from @Greg Scott:
This is a tough lesson. I have learned similar ones in the past.
Realistically, he doesn't even need to take you to court to get his money. He can just put a mechanic's lien on your property and he will get paid when you sell. Since you have no contract, there is nothing that says you do not have to pay if you are not satisfied, and your spreadsheet would seem to indicate you owe him the money.
Similarly, since you paid him for previous work on the spreadsheet, and the spreadsheet shows you owe him for additional work, your argument is not very strong. He probably could take you to small claims court and win. Given you are out of state, it would be expensive to fly there. If you choose not to show up, he would almost certainly be awarded a judgement.
Of course, you could choose not to pay the judgement, but then he can send it to a collections agency and your credit score will be trashed.
I don't see a scenario here where you get through this cleanly. I recommend you pay him the final amount, but get a lien release, in advance, that says if you pay him this final amount, he will have been paid in full for his work and no further liens can accrue.
I believe a mechanics lien once filed generally initiates a court date to substantiate the claim. So, the contractor can't just "put a lien" on the property. The initial action is more like a lis pendens in function I think. Its a placeholder until the court action is decided.
- Realtor · Atlanta, GA · Member since 2021 · 239 posts · 120 votes1y
@Marc Shin Hey! So the short answer is...Yes, he can still take you to court, but his first recourse will likely be to place a lien on your property. This is why I always advise rehabbers (per my personal experience) to have their own contract ready before work starts. It should include a few exhibits attached like a scope of work, a blank change order form, a final layout illustration, and a lien waiver (for the final payout) that they sign before starting. If they’re not on board with this, you should find someone else.
In your case, it’s not too late to try to resolve this. Conduct a walkthrough documenting your concerns about the unfinished work and reach out to him to negotiate. Maybe offer to pay a portion of the balance contingent on completing the work or signing a waiver to avoid the lien. If he’s still unreasonable, contact a real estate attorney ASAP!
- 1yGreg ScottPro MemberRental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
Quote from @Kevin Sobilo:
Quote from @Greg Scott:
This is a tough lesson. I have learned similar ones in the past.
Realistically, he doesn't even need to take you to court to get his money. He can just put a mechanic's lien on your property and he will get paid when you sell. Since you have no contract, there is nothing that says you do not have to pay if you are not satisfied, and your spreadsheet would seem to indicate you owe him the money.
Similarly, since you paid him for previous work on the spreadsheet, and the spreadsheet shows you owe him for additional work, your argument is not very strong. He probably could take you to small claims court and win. Given you are out of state, it would be expensive to fly there. If you choose not to show up, he would almost certainly be awarded a judgement.
Of course, you could choose not to pay the judgement, but then he can send it to a collections agency and your credit score will be trashed.
I don't see a scenario here where you get through this cleanly. I recommend you pay him the final amount, but get a lien release, in advance, that says if you pay him this final amount, he will have been paid in full for his work and no further liens can accrue.
I believe a mechanics lien once filed generally initiates a court date to substantiate the claim. So, the contractor can't just "put a lien" on the property. The initial action is more like a lis pendens in function I think. Its a placeholder until the court action is decided.
Incorrect.
Anyone can file a mechanic's lien without taking you to court, and I have experienced this personally. A contractor hired by the prior owner of a property got stiffed. The contractor filed the mechanic's lien even though we had proved we were new owners, and gave him the contact information of that owner. There was never a court date but the lien was filed. We had to pay our attorney to get that lien quashed.
- Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes1y
Or you could have done nothing and waited for the lien to go away. There should be timeframes for the lien to be enforced and brought to court otherwise it just goes away.
I believe in my state it's 2 years. So if a bad mechanics lien was filed against a rental of mine and the contractor took no further action the lien goes away after 2 years costing me nothing. This is why I said it acted similar to a lis pendens. Obviously if you need to sell or refi you may nerd to take action as you did.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
Quote from @Marc Shin:
I've been working with a contractor on some renovations and they are threatening to take me to court. We do not have any signed contracts in place. What we have is a good spreadsheet with a list of tasks, and as they perform the tasks, I've been paying him via Zelle. I did not pay him the final amount (less that $2K) because he did not finish the job according to my satisfaction. Can he really take me to court when we do not have any contract in place? I live out of state from my property. What should I do?
anyone can sue anyone but even without a contract you have an agreement based on a table of costs. My recommendation would be to be specific with him and outline exactly what you disagree with and why. You should also be aware to make sure what was provided does or does not meet industry standards. For example if you asked him to only paint a wall but the wall does not look good because the drywall itself is bad - that is not his problem because you did not want the drywall fixed.
Specify what it is you want done and if complete you will release the payment. if he disagrees then he may sue and then let the court decide.
7e investments53 Reviews - 1yJordan RayBusiness MemberReal Estate Agent · Memphis, TN · Member since 2023 · 642 posts · 333 votes
Quote from @Marc Shin:
I've been working with a contractor on some renovations and they are threatening to take me to court. We do not have any signed contracts in place. What we have is a good spreadsheet with a list of tasks, and as they perform the tasks, I've been paying him via Zelle. I did not pay him the final amount (less that $2K) because he did not finish the job according to my satisfaction. Can he really take me to court when we do not have any contract in place? I live out of state from my property. What should I do?
I would just go ahead and pay him the $2,000 and get it in writing that he will not pursue you going forward and then set better systems & expectations in place to avoid this problem in the future, lesson learned. I personally have my contractor sign a "Independent Contractor Agreement" and I will have it specify the dollar amount of the renovations in the agreement and attach the scope of work to it. I will also specify that any additional work must be approved in writing. I also am sure to collect W9's from my contractors to make sure they don't try to not pay taxes on the money I paid them to get over on me that way.
Jordan Ray - eXp Realty5112 Reviews - Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1y
Welcome to the realities of OOS investing! In theory, you should be able to manage the job remotely, but there is a reason why I show up at least every other day.
What is in dispute? Did you ask him to correct the issue?
I usually try to work things out with people, saves a lot of attorney fees and makes for a better life. Just imagine you'd scale this..
- 1yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Kevin Sobilo:
Quote from @Greg Scott:
This is a tough lesson. I have learned similar ones in the past.
Realistically, he doesn't even need to take you to court to get his money. He can just put a mechanic's lien on your property and he will get paid when you sell. Since you have no contract, there is nothing that says you do not have to pay if you are not satisfied, and your spreadsheet would seem to indicate you owe him the money.
Similarly, since you paid him for previous work on the spreadsheet, and the spreadsheet shows you owe him for additional work, your argument is not very strong. He probably could take you to small claims court and win. Given you are out of state, it would be expensive to fly there. If you choose not to show up, he would almost certainly be awarded a judgement.
Of course, you could choose not to pay the judgement, but then he can send it to a collections agency and your credit score will be trashed.
I don't see a scenario here where you get through this cleanly. I recommend you pay him the final amount, but get a lien release, in advance, that says if you pay him this final amount, he will have been paid in full for his work and no further liens can accrue.
I believe a mechanics lien once filed generally initiates a court date to substantiate the claim. So, the contractor can't just "put a lien" on the property. The initial action is more like a lis pendens in function I think. Its a placeholder until the court action is decided.
I am sure every state is a little different or have nuances but for sure as Greg mentioned materialmen can file a lien and then just wait.. the other thing they can do is a court action for unjust enrichment claims.. those are the two ways Materialmen protect their interest at least out here on the Left coast.. Lien is filed and recorded and then do nothing until it gets paid or property is sold and is paid .. Or file the litigation ( liz pendance) and proceed that way.. No one in their right mind is going to file a lawsuit over 2k.. they may and should just take you to small claims and or as Greg stated file their lien and wait.
Also work done to YOUR satisfaction is a pretty weak argument and totally subjective. - 1yTom GimerBusiness MemberDMV · Member since 2017 · 3k+ posts · 3k+ votes
@Marc Shin You need to provide the location of the property.
Mechanics liens laws are state-specific with respect to contract and notice requirements, license status, dollar amount thresholds, and especially TIMING. Nobody can answer your question as-is.
The contractor may have zero to stand on here.
Gimer Law516 Reviews - 1yJason MalabuteBusiness MemberAccountant · Los Angeles, CA · Member since 2016 · 2k+ posts · 901 votes
Hey Marc, this is a tough situation and a good reminder to always have a contract in place for any business dealings. I’d recommend consulting with a lawyer who specializes in contract law to understand your options and how to protect yourself moving forward.
Malabute & Company CPAs525 Reviews - Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes1y
@Marc Shin The contractor didnt finish to your satisfaction ? That argument wont get you far in court . In theory you could never be satisfied .
The contractor can put a lien on the property , he could sue you in small claims court , or in some states have you arrested for theft of services . If you are out of state , how much will it cost you to show up in court , once , maybe twice , and possibly lose . The contractor then gets a judgement and can attach real property .
- Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes1y
@Marcus Auerbach tell him to kick rocks, barefoot. He won’t take you to court. Call his bluff.
- 1yStuart UdisPro MemberAttorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
@Marc Shin Let's assume you are correct and the work was not done to completion. Even if that were to be the case, being right and doing what's right for your real estate business are too very different things. If you are in this business long enough you will undoubtedly arrive at situations where taking the small loss even if not fair or warranted based on the circumstances is best if it keeps everything moving and avoids more costly delays, liability and inconveniences.
In this case, if you withhold the $2K, you still have to find someone to complete the work to your satisfaction. This means mobilizing another contractor while out of state which takes time and money. In the meantime, maybe the current contractor does take you to small claims court. Maybe he does file a nuisance mechanics lien (whether he can and precise procedures) will be dependent on local law. Nevertheless, both scenarios require your attention and defending against those claims could very well cost more than $2K.
One of, if not the leading cause for dispute between contractor and client is poor communication. This starts with contracts but also extends to communicating expectations during the construction process. When adversity arises, its very easy to shut down, stop communicating and toss around legal threats. This seems to be what's going on here. Can't you come together and figure out a solution where he returns and addresses your concerns and collects the $2K? Also, looking at the bigger picture, if this remains contentious, good luck getting him to come back to address any warrantable repairs etc. At the end of the day don't let pride get in the way of making the right business decision and that's a mistake real estate investors often make.
- 1yMelanie P.Pro MemberRental Property Investor · Member since 2023 · 1k+ posts · 922 votes
I would reply to his threat of going legal with the final punchlist you're requiring to release final payment. Then if he goes to court you have something to discussed. "Not satisfied," isn't going to cut it. First, you do have a contract, the spreadsheet which you both shared, agreed to, performed work and received payments under, etc. - that IS a contract. Second, there's a legal concept called "unjust enrichment." I think that part is self explanatory.
- 1yTom GimerBusiness MemberDMV · Member since 2017 · 3k+ posts · 3k+ votes
Quote from @Melanie P.:
I would reply to his threat of going legal with the final punchlist you're requiring to release final payment. Then if he goes to court you have something to discussed. "Not satisfied," isn't going to cut it. First, you do have a contract, the spreadsheet which you both shared, agreed to, performed work and received payments under, etc. - that IS a contract. Second, there's a legal concept called "unjust enrichment." I think that part is self explanatory.
Unjust enrichment is an equitable remedy. The existence of a contract -- I agree with you on this -- may be a complete defense to such a claim.
Oops I didn't follow the lien laws so I'm going to sue for unjust enrichment is not a likely winner.
Again, without knowing where this property is located, this whole discussion is kinda pointless.
Gimer Law516 Reviews - Member since 2018 · 1k+ posts · 1k+ votes1y1. Yes, you have a contract. It is an oral (parole) contract probably, but it is a contract. Seems like there’s at least part performance on both sides. It is not a land contract, so it probably doesn’t need to be in writing, and you got prior performance issues anyway.
Quote from @Marc Shin:
I've been working with a contractor on some renovations and they are threatening to take me to court. We do not have any signed contracts in place. What we have is a good spreadsheet with a list of tasks, and as they perform the tasks, I've been paying him via Zelle. I did not pay him the final amount (less that $2K) because he did not finish the job according to my satisfaction. Can he really take me to court when we do not have any contract in place? I live out of state from my property. What should I do?
2. Course of prior conduct may be used to determine what constituted acceptable quality. Also, you don’t say what he did wrong and what you did to bring the defects to his attention so he can correct them. For all we know, you could be pulling a Trump and just ahem “doing” your contractor. - 1yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Quote from @Stuart Udis:
Can't you come together and figure out a solution where he returns and addresses your concerns and collects the $2K? Also, looking at the bigger picture, if this remains contentious, good luck getting him to come back to address any warrantable repairs etc. At the end of the day don't let pride get in the way of making the right business decision and that's a mistake real estate investors often make.
All good answers above, but here's a great answer ^^^^. Even if the guy is a jerk, he can still finish up for far less money than anyone else. And understand this - he may threaten you with court/liens, but he doesn't want to go that route any more than you do. It's time, money and stress for everyone involved.
Can you visit the jobsite one time and have a face-to-face meeting where you pay him $1000 and sign a note that guarantees he will recieve the final $1000 after completion? So much easier!
And you now know this, but never, ever, neglect to have a firm contract and SOW in place again. They exist for a reason....
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