203(k) loan. Stuck with a bad contractor who wants to charge more

[Daniel Adams]

Hi All,

Wanting to see if there is any advice for a situation that I am going through. I closed on a 203(k) loan on January 4th. My wife and I thought we had a decent contractor and the work was slow but it was progress. Throughout the process he continued to go over budget and we tried to help with giving him some allotments early and signing over a 3K decorating budget which was for painting, something i planned to do. 

We are almost done the project and he gets his attorney to send me a letter asking for 20K for overages. I have not accepted or signed for any of these overages. Long story short, he is threatening to go to court to seek the money. Very frustrating because we are so close and he hasn't once been at the project to manage it, only to collect the check and be at the inspections. He subbed out the work.

The main overage was electrical work which went almost 4K over budget. I was not told before or during the work that it would be in such excess. He went with a friend to do the work and did not try to bid out the requirement or ask that we reduce some of the requests. There is no way I can be legally liable for those charges I did not sign off on or approve me done.

I know we are protected by HUD, our consultant, and the contract but he doesn't seem to get that.

Any thoughts?

[Wayne Brooks]

Agreed, if it is as you say, don't sweat it.  Next, he will threaten to file a lien....this is supposed to scare you out of your pants....it's not a big deal.  You can also remind him there are penalties for filing false liens.  Since it is your lender who approves GC's for their 203k loans, get them involved too.  Don't let him bull doze over you.  Don't agree to, or sign, anything you don't think is fair to You.