My builder is out of money!

[mrG]

I hired a contractor back in August of last year (06) to tear down and build me a new boat house with a second floor party deck. Once the design and terms were agreed to (50% down, remainder due upon completion) he demolished and hauled off my old dock then became very hard to get a hold off.

After months of failed promises and numerous excuses he finally started working in December. Working off and on for the last couple of weeks he has completed about half of the job. At this piont I'm just happy he has done some work and not disapeared with my money.

Then he calls me a says that he needs more money to keep the job going! He says he has spent all the down payment over the last few months and doesn't have any cash or credit to buy materials.

I don't think this guy will be able to finish the job even with the remaining 50% of the cash.

Do I fire the guy and hire another contractor to finish? Would this be a breach of contract after months of waiting? I've been loosing sleep over this and it's creating a lot of stress for the whole family.

[ski_king]

If you have a contract, read it, my guess he is already in default of it.

I wouldn't give him any more money, how do you know it would go to materials for your job. Maybe write the check directly to the lumber yard.

Better yet, fire him and find somebody else to take over the job.

[JimN]

He should have been escrowing the fees from each client and using the money from each for only that client. If he's half way done and you're satisfied with what you have gotten for what you paid, I would be thinking about getting a new contractor. OTOH, if you have a contract, he's on the hook fro his part. Unless he goes under. Then, you have to sue to get your money back and he probably snorted it.

My garage went badly for the first three months (very little action on their part) and when they came to put it up, it took one day for the whole structure, part of one day for the electrical (wasn't up to code, as it turns out) and the framing crew didn't install hurricane clips, which are code for Illinois (where the company is based) and Wisconsin. The effin' dirtbag is out of business now.

[Chief]

Kick his a&& to the curb. Sometimes it's best to cut the loss and find someone else. If you give him the rest of the money who knows when you will see him again. If he files bankruptcy you are up the creek. Good luck brother.

[JohnE]

I'm an electrical contractor and building inspector. I've seen this so many times. I'd fire him and hire someone else. As a contractor, I see homeowners who just expect too much or get buyers remorse often. I don't think this is the case here, though.

[Overdraft]

Originally Posted by mrG

I hired a contractor back in August of last year (06) to tear down and build me a new boat house with a second floor party deck. Once the design and terms were agreed to (50% down, remainder due upon completion) he demolished and hauled off my old dock then became very hard to get a hold off.

After months of failed promises and numerous excuses he finally started working in December. Working off and on for the last couple of weeks he has completed about half of the job. At this piont I'm just happy he has done some work and not disapeared with my money.

Then he calls me a says that he needs more money to keep the job going! He says he has spent all the down payment over the last few months and doesn't have any cash or credit to buy materials.

I don't think this guy will be able to finish the job even with the remaining 50% of the cash.

Do I fire the guy and hire another contractor to finish? Would this be a breach of contract after months of waiting? I've been loosing sleep over this and it's creating a lot of stress for the whole family.

Can you not just open an account at a local building supply house and have them invoice you directly for the material - review all the packing slips though on a daily basis to understand and ensure all the material is going to your site. Then - pay the labour on a weekly basis so he can manage your site financially - quick rule of thumb is number of manhours times the local rate +- $ 30.00. Manage change orders (extras) the same way you and he would normally. At the end of the project - add what you have paid in labour + your account at the building supply house and your deposit - then cut him a cheque for the differance - his profit. Given the history of the relationship and what he is telling you, it is the only fair thing to do - he makes some juice and you don't have to find a new builder...win win.

Seems like robbing Peter to pay Paul might be in play if you write that cheque and I would be concerned about a contractor taking over another contractor's work. Heck, even finding a guy who would take over another's work you run the risk to jumping into the 'shark tank' so to speak as some contractors tend to have the "fangs coming out" if they sense the owner is in a jam - and blame many problems on the "other guy".

Last thing, discretely ensure his men are getting paid and that statuatory (state & federal) deductions are being remitted. In Canada we have certificates of clearance produced by contractors which relieves the owner of any liability in the case if a worker gets injured while on your job site or if deductions have not been made.

My kick at the can..

[JohnE]

Another thought. If he doesn't pay the supplier for the materials that go to your house, they can lein your property. Happened to one of my friends. And his contractor was a good friend of his. Again I'd get out. Since you've lost trust in him, I don't see there being a good outcome. The other thing you may consider is telling him that you're not paying another dime until he finishes completely. You might be violating the contract, but he probably has too by now. Put the ball in his court. But realistically I'd fire him.

Also FWIW, 50% down is not legal in many states. 1/3 max.

[suedv]

I agree with JohnE fire the guy, but before you do it get a lien waiver signed that indicates that he has been paid for the work he completed and material he paid for. I would also want him to sign an affidavit that certifies that all subcontractors and materials suppliers have been paid in full. Get this before you tell him he's done or he might not be willing to sign it.

[Mag_Red]

Originally Posted by suedv

I agree with JohnE fire the guy, but before you do it get a lien waiver signed that indicates that he has been paid for the work he completed and material he paid for. I would also want him to sign an affidavit that certifies that all subcontractors and materials suppliers have been paid in full. Get this before you tell him he's done or he might not be willing to sign it.

First thing you did wrong was to pay 50% up front. Don't know about Texas, but up in Ohio, it's against the law for the Contractor to request this much. My next call would be consulting an attorney that is familiar with construction. You need to make sure some one doesn't lien your property. This guy should be fired, but if not, no additional $$$ should touch his hands till the project is done. Just curious......what was the price range of this project?????

[Lottawatta]

Speaking as a project manager for a plumbing contractor. We see this all the time. We take over for other contractors who fail to perform, can't secure final inspections, or who just disappear. You need to put the screws to this guy. He has been playing the robbing peter to pay paul game long enough. Either force him to finish, or cut your losses and get someone else. Chances are, there are others in your same position with the same guy. Don't buy his material, he will take it and finish someone else's job. Don't give him more money, he will use it to complete someone else's job, or blow it on his own expenses. In most cases, these fly by night guys will work on the project of whoever screams loudest until they dig a hole they can't escape. They go out of business, leave town and start all over again in another town.

One of the guys that skis at my lake had this happen to him. He paid a contractor to build his dream house. The contractor's suppliers cut him off, he had no money, no credit, and blew the advances my buddy had gave him. Long story short, they found the contractor in Florida, drug his arse back here and he now sits in the pokey until he can pay restitution.
Good Luck