Best way to fire a contractor?

3 Replies

To get to the point of my question, and not get too caught up in the details I wanted to get some advice on the best way to fire a contractor.  The contractor I hired to rehab my out of state property is two months past the contracted end date and is not going to be done anytime soon. The contractor is full of excuses, has ran out of money and mis managed this project.  I am not paying the contractor the final Installment for this exact purpose. I now have to go find another contractor to finish the job and pay them. If I can get some advice from fellow investors that have experienced similar problems with their contractor and on how to notify the original contractor of a work stop notice without the original contractor putting a lien on my property I would appreciate it.   I now have to go find a new contractor to finish the job and will pay them from the amount that I’ve held back from the original contractor. The experience I have had with this contractor has turned into the poster child of investors fears of working with a contractor.  Thank you in advance for your replies and advice!

I'm guessing that you didn't have a lawyer review the contractor's agreement.  Every project should have included within the signed agreement a finish by date.  The scope of work should specify milestones for work approval by you before any monies can be transferred.  A penalty clause that kicks in after x many days past completion to allow for weather and the unforeseen. 

To be really on top, change orders should come with automatic extension days.  Now, you state that the final payment is being held back by you.  Could be a problem, maybe not.  It depends.  Read on.

If I was in your situation, I'd find someone in my backyard with experience shutting down a contractor this late in the game.  I'm guessing, the final is 10% of the total.  That's an amount that most unscrupulous contractors move on leaving on the table after you look them in the eye and say "you're fired".  The complexity that I've dealt with is shown by example: 40% of the work has been completed to an acceptable stage, and 60% of the money has been transferred.  It's real hard to get it back.  Real hard. Every contractor that does this to the unsuspecting customer has the benefit of the doubt in court that they are owed the money received and already in hand. If you had milestones, and at the first sign that a milestone would be missed either by date or performance, you can fire right then and there and square up based on work completed, not whether or not he has an agreement signed by you that sets specific amounts owed at discretion controlled by him.

If the contractor is good at being a grifter by virtue of his contract and non-performance, then he has every right to go straight to the county recorder and file a mechanic's lien, get a stop work issued until full payment has been recieved...you can't put another worker on site until that is resolved...see how this could unravel on you. It can get worse, if he was using subs as opposed to employees, and didn't pay them, they can lien you and stop any work as well until you pay up.  A good thing to do, talk to every worker on your project.  If they aren't employees, then you need to get a lien release from each one before they disappear on to their next project.  Careful going on social media and badmouthing too.  Gives a reason to sue you. 

I wonder, how did you find the guy, what were his references, did you go look at two or three finished projects, did you check the better business bureau, make him get a bond, look at the county court records and throw his name out to see what comes back.  

Send them a written notice along with a check for any amount owed. State specifically how they've failed to adhere to the contract and that you won't be paying them another dime. Keep it short and professional, no emotion.

@Nathan G. and @Daryl Luc thank you for taking the time to reply to my post and your advice.  To answer you questions Luc, the contractor was referred to me by my realtor.  He unfortunately has gone underwater on all the projects not just mine, the realtor has had positive results with him in the past, but for unknown reasons unable to perform recently.  I had contacted other investors who worked with him all had positive referrals, I looked him up on better business bureau, has no negative reviews or reports. 

I was able to resolve the situation by agreeing to terminate the contract with no further payment to be paid.  I am now using my property manager who is also a licensed contractor to finish up all the loose ends.  Not ideal on how long it has taken to finish this project and holding costs, but ended with an amicable resolution and will hopefully have the project wrapped in the next couple of weeks.

Thanks again for your replies and best regards to both of you.

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