Living a Nightmare on first flip NEED HELP!!!
Hi BP community, Im living a real life real estate nightmare on my first flip. So I just recently finished my first flip with my general contractor who i know personally from him remodeling my own personal residence, so i know he does good work. The total cost of the renovation was a little over $70k. We signed the original contract for $64k but as expected there were some overages one in particular was to address a drainage issue near the foundation of the home, so i agreed per his recommendation to have new drain tile installed on that side of the house. He said we may have to do drain tile on the other side of the house but he would let me know. So after installing the new drain-tile on the one side of the house and a new sump pump system in the basement, he left the walls open in the basement to check for water entry for a week. According to him he tested both sides by continuously running a water hose on both sides and we had quite a few rainstorms that week with no water entry according to him. So he made the decision that the water issue was solved and proceed to frame the walls and completely finish the basement remodel.
After the renovation was complete, the house passed the municipal final inspection, I gave my GC the final payment for the project and I listed the home myself because I hold a realtor license as well. I received a 98% offer off list price after my first showing, things couldn't be going any better. The buyer had their home inspection and only minor issues were uncovered which I had my GC handle quickly because the buyer was using a FHA loan and I know how anal they can be. So after the inspection repairs were made the only thing left was for the FHA appraisal. A few days before the appraisal was to be scheduled there was a bad rainstorm in the area. My G/C just so happened to go to the property the next day to tackle a quick repair and called me and told me there was some water in the basement but nothing major. When i went to inspect the property myself I noticed the water issue was more serious than expected. The entire carpet in the basement bedroom was damp and there were visible signs of water in several spots. The weather report showed that there would be more rain in the next coming days so me and my G/C decided we would see how bad the issue actually was at that point.
So needless to say, after returning to the property after the next rainstorms there was a large presence of water in the basement and it definitely is a major problem. I found out that the drain tile my contractor did install on the one side of the house probably was not done correctly and the way he handled the drainage on the other side after installing an egress window was probably done poorly as well. At this point I have to get the issue fixed and it will definitely be a major expense and potential kill the sale. When I asked my G/C how he would address the problem he only came up with quick patch up solutions which I know will not work and he is claiming there was no negligence on his part and i am responsible for it.
Has anyone ever faced a situation like this??? What do you believe are my options. Luckily for me I kept pretty good records of the transactions with me and my GC as far as the contracts with scope of work, draw payment receipts, payment ledgers, extra work requests and lien releases. Do I have a legitimate claim against my contractors surety bond for negligence? I mean, you would expect a licensed G/C tasked with a full basement remodel to address waterproofing a basement competently. What do I do??? This deal will make or break me!!!