I am 3 month into my first flip. I encounter many issues.
Now, another issue. one of my independent contractor claimed that his workers get robbed at the property during rehab, and asked me paying back their lost which is about $700 cash. Also he claimed he has done much more than the contract state and spent much more time. He is demanding extra $1000 for it or he will fill a lien against the property.
1. Learn your lesson -- have a strong contract, get proof of license and insurance, get references, don't pay ahead of work, get lien waivers if you don't trust the contractor, etc.
2. Have the contractor who was robbed file a police report immediately. If he refuses, it's probably safe to say that you aren't on the hook to reimburse him for any losses. If he does file a report, call your insurance company and see if they'll cover it. If not, call an attorney to determine your rights/responsibilities.
3. Offer to pay the contractor for the work that has been completed. If he's finished 50% of the work, offer to pay 50%. If 75%, offer to pay 75%. Try to get him to agree to accept reasonable compensation for work completed and then part ways. Find another contractor and see #1 above.
"Once again, it is better to pay, make certain all liens and potential claims (workers & suppliers) are covered and walk away."
How can I make sure the potential claims from the workers are covered? also the suppliers? most suppliers here needs to be paid before delivering the products.
Chelsy - it all goes back to lien waivers. Get your contractor to sign a lien waiver. All of his employees should be covered under that l.w. If you are paying workers directly, then get l.w.'s for each of those that you pay. But realistically, your contractor is supposed to pay the subs.
As for suppliers - did you get things from them or is your contractor? The way our contractors work in IL is that the general contractor gets all of the supplies, and when he pays them, their lien options go away. Your contractor should be able to provide copies of all orders that he submitted to the suppliers.
I agree, going through the mess of seeing if permits were pulled etc... will only cost you more in the long run. What it could also do is open up a can of worms with the codes department as well.
Try to offer a work around somehow and just move on from this one.
The less you need to involve the "civil" courts the better. Even if he would file a mechanics lien he would still need to justify that lien.