CONTRACTOR HOLDING MONEY AND NO WORK

10 Replies

Hello BP community!

I just recently came across this forum and I am going through a difficult flip attempt. I'm not which category this goes into. 

I paid a licensed contractor in South Bend, IN $30,000 for carpet, wood flooring, appliances, and cabinets. I gave him the money last June 2017 and have been trying to pry work and/or stuff out of him for the past 7 months. His father died shortly after I gave him the money so I tried to be understanding for a while. Then said he had issues with subs. He has told me several times "xxxx starts tomorrow" but it's just BS. I don't know if he has too many jobs or is just out of money. Since the first of the year, there has been workers at the house for only 3 days. He still owes me about $20,000 worth of stuff and/or work. It will be years before he finishes at this rate. I realize I need to move on or I might miss the good window to sell the house in the summer. What kind of options do I have to go after this dirtbag? Should I keep trying to coax him to work on the house or just commit to moving on? Does anyone know a good place/site I can find someone who can take over the rehab? I'm reluctant to move on since he knows what he's doing (as a builder) and knows the in's and out's of the project/house.

Thanks

Brian

Move on! Like 6 months ago. My only advice for the rest of the money is get a lawyer but as far as the GC, it's not going to get better. This is business. His father died, that's a few days or a week off and he should still have work progressing with workers on site. 

@Brian Horwitz   You are likely not going to get the work done, or just enough to get you to stop complaining for a few weeks.  You need to speak with a lawyer to see  if it's viable to bring action against the contractor.  If he has a license you should be able to bring it in front of a judge and win.  Never pay a contractor more than materials and we actually only pay 10% down.  If the material cost is significant we tell the contractor we will pay them on the start of first day, or they can put us in touch with their supplier and we will pay the supplier directly.  Same goes for finishing the job, if a contractor says they are done, do not pay until they are done or they are going to skip all the details or fail to cleanup.  I pay my contractors once a week, and they have one chance to get paid.  If I show up to the site and they are 95% done, I give them 50% of the pay.  You need to have money owed to them at all time to motivate them to stay on task and finish the job.  The first time a contractor works with you is the best job they will ever do in most cases so if they poor work the first time around then don't expect it to get better.

@Brian Horwitz

Sorry for your pain. Unfortunately, this happens frequently in this business. 

The main thing here if you decide to move on is to cut ties cleanly with the Contractor because he and/or his suppliers can put a lien or liens on the property whether justified or unjustified which can complicate and delay the sale even if you fight the lien/s and win. In line with this, did you have a signed contractor agreement for the project? Did you get signed lien waivers for what you have paid out so far?

Feel free to give me a call to discuss some of the options you may have based on how I have dealt with similar situations in the past. Just note that I am not giving legal advice or acting as your attorney.

Wow this is EXACTLY what my husband and I are experiencing right now on our first flip! We provided the GC with money up front for a GC fees and subs. The project start Aug 2017 and here we are now in Jan with only a 2 flat w a half gut out! Extremely pissed and tired of dealing with the broken promises of dates the task will be finished. It’s also interfering with us getting a loan to finish the project. WhAt appraiser will aprAise the 2 flat for the amount we need. I looked into legal advise and was informed it may take YEARs to get our money back. We paid him using credit cards so now we’re paying off additional debt each money and NO Work! How can we look for another contractor is we have so much already at stake with the first character? I’m really considering selling the property As Is  verses continuing on w the flip? Please Help advise is very much needed in my end as well.

Thanks for the responses! I think I just need the nudge to move on.

@Casity Kao You are right. The juice isn't going to be worth the squeeze. I will definitely go by these rules for future contractors!

@Anthony M. I do have a invoice which lists everything I paid for. I definitely did not get signed lean waivers. I would definitely like to chat with you, thanks!

@Amanda Strickland I have debated selling my property as well but I know a fellow investor will need to turn a profit and not pay much on a house I'm way upside down on. If I can find the money to finish, I want to see my house finished. I guess this is all just a very expensive learning experience!

I never pay up front. I’ll buy the materials myself and pay them enough to get started but that’s it.

I would fire him and offer to sue him unless he returns half of the money.

As mentioned, discuss this issue with a lawyer and move on with another contractor. This business can have expensive lessons but don't feel bad, we've all got scars. Keep grinding, you'll get through it. 

For those that haven't made this mistake or are just getting started, this is exactly why you don't pay contractors upfront and why all the contractors on here or anywhere else who argue differently should be ignored. Not all contractors are bad either and they have to protect themselves too but you must be careful not to put yourself in position to be taken. 

This happened to me on my first BRRR in South Bend. Let me know if you need a local opinion on the contractors... I might know if they are any good. I'd give you some names, but it looks like you need a serious GC on this project... Which I'm no help with because I just sub out jobs as I need them. And please share the name of this guy so we can all avoid him!

Brother this sounds like a lesson learned the hard way. I would recommend only paying for materials and hold the rest till completion. If you have a deadline pass it on to the contractor and include punitive damages at $50 per day that it goes past the deadline. These are things that have helped me when dealing with contractors.

Similar thing happened to me but for a smaller amount of $3500. I could not get a call back from him. I reported him to BBB and he called the next day and started work soon after.

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