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Tax, SDIRAs & Cost Segregation

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Marsha Rost
  • Rental Property Investor
  • Houston, TX
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72
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Problems with contractor

Marsha Rost
  • Rental Property Investor
  • Houston, TX
Posted Aug 2 2019, 23:10

First of all, my apologies for the lengthy post. I will try to make it brief. I need advice on how to deal with my contractor in order to legally protect myself going forward. So here's the story:

On my first real BRRR, I signed a contract with a contractor who had done a small job rather well on my own house. We had set up payments so that I paid 20% upfront and 20% after each predetermined milestone. And 20% at completion.

Turns out he is HORRIBLE with numbers and has absolutely no idea how much we've paid him or how much he has quoted us for stuff. There were some change orders where we added work and some work we took away. I think this all messed him up to the point where he thought he has done more work than we have paid him for when in fact it was the other way around. He stopped work for the most part and would only work one or two days of the week and 6 weeks past the initial proposed completion date there is more than 25% of the work incomplete. He demanded payment and accused us of being manipulative and wanting him to work for free. Also I found out that he had seriously underestimated the costs so he would ultimately have to pay out of pocket to finish the job.

I tried to meet with him to show him the numbers and explain to him how we are actually ahead on payments but he refused to discuss and demanded payment. So I asked him to stop any work and we would no longer need his service. Now he has sent me an invoice charging me for things I have already paid for and he refuses to meet with me to discuss. I believe all of this is as a result of his ignorance and inability to properly do calculations. He also has equipment at the property but won't set up a time to come pick up because he doesn't want to meet with me and believes there is nothing to discuss.

A note here, most of our comminication was done through text messages.

So my question is,

1. Does my text message asking him to stop work count as a legal notice of the termination of contract?

This is what the contract says "...Article 10. Termination.

10.1. Termination by Owner. If the Contractor breaches any of its obligations under this Agreement, then Owner may give Contractor written notification identifying such breach. If Contractor has not cured such breach within seven (7) calendar days from its receipt of Owner’s written notification or if such breach cannot be cured within such seven (7) day period, then if Contractor either does not begin cure within such seven (7) day period or fails to diligently prosecute cure to completion, Owner may terminate this Contract and take possession of the Work. Alternatively, instead of terminating the Contract, Owner may cure the breach and deduct the cost thereof from amounts otherwise owed to the Contractor..."

2. What do I do with his stuff?

3. Is there any legal action I need to take to protect myself at this point? I just planned on ignoring him since I don't really owe him anything and wait to see if he finally wants to discuss.

Thanks in advance.

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