Contractor Problems
I am having some problems with a contractor performing. I have a contract with him which laid out what work was to be done and when it was to be completed. There is also a penalty clause which stipulates that he is to pay $25/day for any work that is no completed by the due date.
The contract started at the begining of May and was to be completed by mid July. It had a statement of work but no timeline as to when each line item should be completed. To date he has not completed a single item in the contract, although he has started several things.
There have been several times during the job that he disappears and won't answer the phone or return my calls. I find out later that he is doing other small jobs for money beause he is in some financial difficulty. I also find that some of the money that I have paid him so far has gone into other jobs that have nothing to do with me. At this point, I feel that I am at about a break even point as far as money paid to work received and would now like to get him off of the job and get someone else in to complete the work so that I can move on to the next project.
I have talked to several other contractors and have been told that I need a signed release from him saying that he is off of the job.
My question is; if I can't find him to sign a release, or if he won't sign it, what are my options? Also, what verbage should I use in writing this up to begin with.
Any help or advise would be greatly appreciated.
@$25 a day penalty it looks like so far you have about a $1000 credit with him. I would have him get back to work and then when he wants to get paid if the work totals $1010, I would give him $10.00. I'm sure a discussion will follow. At that point you could either get him to finish what he contracted under the guise that you will forget the penalties if he just gets it done now.
Already been there.
He was supposed to finish 2 items after which I would pay him $2,000 less materials that I had purchased. He was well on his way to finishing and then dropped out again last Wednesday.
He hasn't answered a call or returned one since.
Sounds like it is time for some certified mail and find a new contractor.
You may want to check to see if Texas requires general contractors to be licensed.
If so, then I would report him to the appropriate agency.
Here in NC, such actions would result in his license being suspended or revoked.
Hope it works out
By the way, how did you come across this character?
NC
He was recommended by another investor who had been using him for the past 1 1/2 - 2 years. I had seen his work before hiring him and he did decent work.
Since I hired him, he got into some financial problems. Instead of talking to his clients (he did this to at least one other person that I know of at about the same time as me) about his problem, he just stopped taking or returning calls.
Before you fire him, learn what the laws are in your town. For instance, in Denver - you would lose any rights to pursue him thru the licensing boards. Check with the boards first - they have more clout with him than you do.
Yeah..... there is no contractor licensing in Texas, though
Even though he's a nice guy and wishes he could finish for you, he's got money problems and is juggling jobs trying to keep a cash flow. Not a good sign.
This is what results form the upfront-money practice or paying contractors in advance. It's too easy for them to get the advance deposit, then go use it somewhere else. Then, they have to get another deposit on a newer job to go finish the first one where they've already spent that money, and ...etc.
Part of the risk you run unless you get a performance bond like those required on government jobs.
I generally take 40% up front unless I know and like you, People pay it because they want a good job done and they trust me. Out here this is standard practice....
[addsig]
Yeah, it's standard practice everywhere. That's why home improvement contractors are among the top consumer complaints heard in the nation year after year, and remain among the top complaints investigated by the states' attorneys general.
Property owners shouldn't have to take a risk when hiring a contractor. While it's true that there are good contractors in whom consumers can trust depositing their cash in advance, the practice essentially introduces risks to the consumer. Purchasers have far more control when they pay for services received, approved and accepted.
There are various methods in handling how much should be deposited prior to work begining.
It is a two way street.....contractors have been burned by home owners albeit more home owners have been burned by contractors.
I had a remodeling friend that required 10% deposit upfront.
An additional check for materials dropped at the site is presented at the time of the drop. On the check it is noted that it is for materials only.
He also bills weekly for services rendered.
If he doesnt get his weekly check for services rendered, then the job stops and penalty fees are assessed.
It has worked out well for him.
I am amazed at the number of states that do not have licensing requirements.
Kentucky is the same way....my brother bought a nice home awhile back.....aesthtically pleasing.....structurally it has serious problems.
Texas is the first and only state that now requires a state license for mold inspections.....no other state has such animal.....one would think that Texas would be up to date on licensing requiredments for contractors and subs.
Your house can be built like junk and we dont care.............. but if there is mold.....we want you to have a license..................go figure.
NC
I am very interested in your last comment.
All of the contractors that I have called so far have told me that I will need to put 25-50% of the bid down up front. How would I get one of them to start the job with no up front money?
[ Edited by NC_Yank on Date 09/07/2004 ]
JC,
I had to edit your post because of advertising violation, nothing personal.
I took a look at your website. You make it sound like "the contractor" is a big bad wolf ready to pounce on its victim.
While the trade obviously has its bad apples, the same can be said with any business.
But with applying basic principles that are often posted on this site, one can weed out the bad apples from the good ones.
As you should know, anyone building in NC can go to the state website
http://www.nclbgc.net/qual_fr.html
and find out who is licensed and who isnt. While this does not in itself confirm if they are in good standings with the board there are avenues in which NC citizens can take to remedy problems that may occur.
That is better then many states.......to wit; Tx and Ky.
I see your from NC as well.......so you are experiencing the same wet wx that I am.....unfortunately.
At anyrate, are you a licensed practicing contractor in NC. Your credentials at your website would indicate such?
I find it strange that you use a broad brush to paint negatively the field in which you are an expert in........why is that.........did you come across a bad apple. (smile)
Enjoy the rain......
NC_Yank
((Some investors / rehabbers may not like putting money up front but any one that is going to be a successful contractor can not nor should not be a clients personal banker.
We have a Lender's section on this website.......I have yet to see any of them lend money for free for any period of time.........unfortunately many small contractors have failed to grasp this principle.))
Let me see if I understand you correctly.
You feel that it is the builder's/rehabber's responsibility to finance the contractor's operations? Why should I do that? In my 30 years working in California for large builders, not one time have I seen that done. Almost all have payment schedules written into their subcontracts that indicate progress payments to be made, and retention to be withheld. Any contractor doing business needs his own line of credit and/or working capital. Recently, I broke my own rule of not to pay in advance, and it was a real pain to get him to perform. I think that a contractor isn't much of a contractor if he can't even finance a $10,000 job. As for his protection, there are lien laws(at least in Calif). I feel sorry for the homeowner that doesn't understand the risk that they are taking when they hand their money over to someone they don't know. Most would be surprised to know that when a contractor asks for money up front, I say no thanks. They usually take the job on my terms after that, but if they don't, that's ok with me because I don't want anybody on the job that has money problems or performance problems, or both.
Quote:
On 2004-09-15 05:28, rod1000 wrote:
((Some investors / rehabbers may not like putting money up front but any one that is going to be a successful contractor can not nor should not be a clients personal banker.
We have a Lender's section on this website.......I have yet to see any of them lend money for free for any period of time.........unfortunately many small contractors have failed to grasp this principle.))
Let me see if I understand you correctly.
You feel that it is the builder's/rehabber's responsibility to finance the contractor's operations? Why should I do that? In my 30 years working in California for large builders,...................................
The key to your statement is LARGE BUILDER.
Larger builders that do rehab do not charge SMALL prices. A large builder has larger overhead cost.
I am not aware of any poll conducted to what size companies investors and rehabbers use to do their work I would venture to say that Rehabbers and Investors rarely go to the larger companies to get work done for them.
They go to small companies and use handymen to do their work. Majority of small business companies that start up will not make it for various reasons.
One of the main reasons that people fail in construction business because of their failure to understand overhead and capital flow.
Im not sure what you did in the 30 years when you were working for these builders, however the principle is still true.
The larger the company the larger the overhead..............this equals to larger prices.
I have over 25 years of experience in the building industry.......from framing to being a contractor. I can assure you that any contractor that is financing a project is being compensated some how.....it may be hid in his costs but he is being compensated for allowing a client to use HIS money to finance 100% of THEIR project. ..............if he is not then it is a matter of time before he gets burned then he will start charging for the finance portion or he will hide it somewhere in his estimate...........at least if he has any
business sense.
Regards..........
NC_Yank
Quote:
I can assure you that any contractor that is financing a project is being compensated some how.....it may be hid in his costs but he is being compensated for allowing a client to use HIS money to finance 100% of THEIR project.
Exactly.