I have a General Contractor that gave me a bid. We agreed on an Independent Contractor's Agreement, and a Scope of Work. I certainly didn't tell him how much material to use but I stated what needed to be done.

We are about a week away from completion and he is stressed because they are $4500 in the hole. They still have about a week to go with paint, and finishing materials like toilets, vanities, faucets, etc. to finish. I owe him $5,000, but that was supposed to include the carpet which will be roughly $2,000. All in all, he is probably going to be $10,000 in the hole.

He does mostly framing. He was way off on his material cost on the inside work. His work has been great and timely. He has offered to show me his P&L for the job.

2 options I thought of:

1) Work with him a bit. He has done everything he said he would beyond my expectations. I can't see doing anything over $5,000. I based my budget on his bid and he was a little more than another bid from another GC. I'd like to tie this 'bonus' to the sale of the house, but I don't think that will help him, based on what he has told me. I picked this contractor because of his credentials. He will still take a significant loss. He may not accept this and walk off the job...

2) I let him work until he says I can't do it anymore (days) and tell him to abide by the contract or be sued.

I've paid him $41k and he is owed $5k on the last draw (I made the mistake of paying ahead of the agreed upon draw schedule, although I kept him working for a couple more weeks).

Sorry for the long post. This guy and his crew has been great. He's in trouble and I've already helped him in several instances like paying ahead of the draw and letting him use materials from other jobs instead of the ones specified in the scope of work.

Can any experienced rehabbers offer any advice?

Thanks!