Architect · Wichita, KS · Member since 2021 · 12 posts · 4 votes
Newbie here, wanting to get into the flipping business and in the information gathering stage.
I just listened to the podcast where the General Contractor pocketed the $1000 that he was supposed to pay the electrician. The electrician didn't get paid so they put a lien on the house. It was a huge blunder.
What do you have to do to avoid this type of issue? Do you have your GC sign contracts? Do these contracts have to be legal and through an attorney or notary? How do you enforce the contract if it was violated?
Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes
5y
@Abigail J Steinert
Easiest way would be to GC yourself and hire your own subcontractors. Then you’ll know they get paid.
You could get a lawyer involved but what contractor would sign a contract paranoid that their client will want to sue them. You could ask for references from the next GC and get their subcontractors to tell you about the GC business ethics. It’s kind of a stretch but it could work.
Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes
5y
@Abigail J Steinert
Easiest way would be to GC yourself and hire your own subcontractors. Then you’ll know they get paid.
You could get a lawyer involved but what contractor would sign a contract paranoid that their client will want to sue them. You could ask for references from the next GC and get their subcontractors to tell you about the GC business ethics. It’s kind of a stretch but it could work.
Usually the lending bank will put the funds with a title company and require an i spect ion certifying that the work is x % complete leading to x draw and then pay the subs directly.
Not sure how it works if your paying all cash though. I would ask the gc how far along the project is when draws are requested and pay for an inspection to confirm unless you know how to do that and then pay the subs directly if your worried after they sign a lien waiver.