Contractor Taking too Long to Finish past estimated completion date on contract

10 Replies

Hi,

I am rehabbing a property in Philadelphia with intentions to flip it and I am a Realtor. The estimated completion date was April 1st initially and then with some added work that came up, we signed an addendum for an estimated completion date of April 17th. The contractor has told me that he would be finished on time, but know he is not showing up some days and obviously on other jobs. I still have a final payment of $5500. The total job was $36,000 and it has an estimated date of completion, but I did not write in any penalties if he didn't finish in time. I would say 75% was done and 25% left, but this last 25% has been about the same for the last 3 weeks. I have a feeling this might take another 2 months at this rate. I would love to just fire him and get someone else to come in and do the rest of the work in 2 weeks and just eat the difference. I had a contractor out and they said there is $8k worth of work left. (25% OF THE WHOLE JOB COMES OUT TO $9000.) I also have date stamp pictures from today (5-8-14) showing all the work that needs to still be done.

I have been told that if I were to fire him the contractor can file a mechanics lien for the last $5500, which does not make sense to me since he is well past his deadline and there is more than $5500 worth of work left. So can my contractor really take his good old time and finish whenever he wants with no recourse? Any suggestions?

He is being non-responsive now and I do not know what to do.

Please help!!

Scott's a great guy and I hope someone on here can help him out. I suggested that he join the BP community because the wealth of knowledge from everyone. Hopefully he can find resolution soon via help from others on here with similar situations.

Well, with no contractual penalties or remedies, you have fewer options. Just like if he finished the work, then you took an extra 30 days to pay him. And of course letting him get ahead of you on the money gives him less incentive. Send him a letter putting him in default, threaten to contract out the work to someone else by a certain date, and let him know the extra amount you will be suing him for. Don't know that you can, or if it will get him going, but better than jus giving in. You need to give him notice anyway if you're just going to take the remaining $5k and eat the rest. After you do it this way, he'll have no basis for a lien, you could get it easily quashed, and he may create some legal issues for himself if he does file a lien. If you need to go this route, spend a couple hundred bucks to sit down with a construction lien attorney, and get some pointers on revising your contract at the same time.

Hey @Scott Gullaksen

You are not alone my friend! I already went trough the same situation and I learned from it, now besides other adjustments, my contract states that if contractor does not show up for x amount of days and its not responding to my text/email/phone calls, it will be considered that he abandoned the job. This way he wont be able to file any liens on my property. I might be the one starting a lawsuit depending on the case.

The rough conversations I had to have with my contractors were not always pretty. It will be another 2 months at this rate if you let it happen. How often you are checking their progress?

Here's what I would do:

Set up a meeting with him and put pressure (a lot) on him to finish the job within x amount of time. Accountability is the key!

If that conversation does not go well, you have no other option. Fire him...take the loss..finish the project...make a profit...move on to the next deal!

Let me know if you need anything!

Best,

Andresa

Often, you'll find contractors (like real estate investors and Rehabbers) can act like big immature babies and form an emotional reaction to something rather than dealing with the facts on a rational basis.

In my experience with contractors, I have found several things helpful:

1) Have a third party act as intermediary to facilitate a meaningful meeting

2) Determine what exposures you truly have (legal, financial, etc.) and be clear in your own mind what you do and don't want to happen

3) Determine what leverage you have upon this clown.

I once had a contractor remodeling the kitchen in my own home. He took money, demo'd kitchen then failed to perform. He may have had a living better thru chemistry problem that sidelined him.

Some investigation revealed that his license was actually owned by a woman business partner. Through a strange coincidence, I had once helped this very same woman (!) who had revealed to me all of her real estate holdings, entities, etc. I wrote her, explained the situation, advised her to direct her partner to finish my job or that I would take take swift and immediate steps to litigate, get a judgment and ultimately foreclose on each and every property costing her untold hundreds of thousands of dollars.

Problem contractor boy became Mr. Cooperation. Find the leverage point.

Any updates on how this went?

Thanks All, It turns out I decided to fire him despite his constant notions that he would put a lien on the house.  I changed the locks immediately and I wanted to install a security system, but I had to show houses.  When I came back a couple days later, the heat was turned up to 90 degrees, he stole my kitchen faucet and other materials, cut some cable wires, and stole knobs off cabinets, etc.  Could have been much worse, but I filed a police report and the neighbor was a witness that he was at the property that day.  When I received a letter from his attorney stating that I owed him money or they would file a mechanics lien, I had my attorney tell them that if he doesn't back off I would go after him criminally and use the neighbor as a witness.   Thanks for all your help, I have not heard from him in two months, my security system is installed( Simplisafe- great system to be able to bring from house to house with low monitoring fee).  I was able to put the house on the market and got it under contract in 10 days.  

Does your broker allow you to flip deals sense you are a realtor? The GC can cause you a lot of problems because you have E&O insurance.


Joe Gore

Originally posted by @Joe Gore:

Does your broker allow you to flip deals sense you are a realtor? The GC can cause you a lot of problems because you have E&O insurance.

E&O typically excludes the insurance holder when the insurance holder is a principal in the transaction. We've done about 200 deals where we were the agent and the principal, and none of those deals were covered by E&O...

@Scott Gullaksen  it seems you did not use any lien waiver when dealing with your contractor here. So at the closing, you might be presented by the title insurer with an affidavit to be signed by you that states that you have paid all contractors and material suppliers in full; this could be problematic ...

Lesson for future? 1. These people are almost universally **** 2. They receive nothing until its earned 3. Contracts aren't worth the paper they are written on. 4. Change locks BEFORE firing someone. 5. Then invite him back with police presence to get his crap

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