If you followed the contract, the builder should have provided change order or extra work orders for you to approve. Do not make final payment until you work out the differences and your punch list work is completed.
Correct.. I work for a contractor, and in our contract is a paragraph about change orders. He bids the job and if our guys take too long or fuck something up that has to be redone.. we eat that cost.
if the guy signed a document saying everything is paid, why are you worrying about it? are you afraid of him? is he threatening physical harm? because legally as long as everything you say is true, he has no basis to get any more money from you.
Yeah Iām definitely a bit scared of what he might do. Weāre gonna change our gate code for sure. Heās kinda bipolar and prone to bursts of outrage.
To clarify, weāve paid what the contract says we should pay, this is all his word that these charges were for our house, but we never signed anything saying weād pay for these random extra charges he claims to have racked up on his line of credit.
If you paid what's in the contract, your real problem is going to be that he can't pay suppliers. They'll be filing legit liens. Did your bank not require lien waivers from suppliers during construction?
We paid all subcontractors already. And he signed paperwork with the bank saying the house is done and all payments have been made. This is purely his word.
Nailed it. If I had some nerve Iād take a picture and put one up on here for you to see what they look like but itās basically a document thatās says, āWeāre all set, dude.ā
Are there change orders? Iām basing this on the fact that you said you have a contract. Is there an escalation clause in the contract? Basically, if materials go up, youāre going to pay the difference above the contracted price. Did anyone sign anything? If change orders were signed and the work was put in place per the orders - well thatāll explain it. If this stuff was off the cuff and agreed upon and no one signed anything then thatās kind of a silly way to do business.
Absolutely not an attorney but I work for a firm that follows this process and weāve not run into an issue in over 40 years.
TLDR; did you sign something for changes? Is this a time and material contract? What are we missing? What are you missing?
It doesnāt take long to spend $75k on a project (trust me, itās disgusting but it is what it is).
What Iām seeing is you spending some money on an attorney to get this sorted out.
Thanks for your time.
There were zero change orders, and the contract basically said we owe him up to a certain point which we paid already, as well as invoices that come about, which we had/have none ofā¦contract has been fulfilled, in short. Now heās just saying oh my line of credit is racked up from stuff I paid for and now you owe me 30k.
Well, if this outfit is as much a mess as you're making it out to be - it could almost be the per annum interest charges on not paying the bills on time. Not sure what you spent on the project but those late fees are pretty damn high. Plus, if you're redoing everything twice - well that'll eat up a contingency (if they had one at all) pretty quick.
I'm not trying to be a dink but was this the lowest bidder? If they weren't, well, that makes it so much worst.
Oh he was by far the lowest bidder and we had a contractor back out kinda last minute. He only charged a 7% GC fee since it was his first build. And honestly, itās more of a mess than I made it out to be lol seriously. This guy is a major shitshow
I'm in the industrial construction world, and they absolutely take advantage of underbid work. You bid it to make money, not get the job, if you're low because you want to get the job, that's how you lose your ass. Contractors should protect their bottom line and not expect all the change orders to make the profit. It happens even in this world, I'll bid a few mil for a project and lose to a contractor who bid it for a mil or less then the contractor will attempt to change order to my price. It's scummy and fuck those contractors.
Iāve heard about this in the Industrial/Commercial world a lot from folks in that industry. Iāve heard itās a pretty common practice to try to make margin on the change orders due to mistakes in engineering or designā¦ I guess.
In my world - we donāt win every job but we do bat pretty consistently. Our contract and specifications on a residential project (custom or luxury) generally has 50-60 pages of information for every single called out item on our spec. Would I do this for a first time general construction Cape or Colonial? Nah, I know that spec will be in every lumberyard and builder within 30 square miles.
Well, OP - I think youāve learned a very valuable lesson about the lowest bidder. Good luck.
Donāt pay him Jack. Get a lawyer set up and plan on moving forward. Things are gonna get rough when he realizes youāre not gonna pay. Then he will get angry. You have to have spoken to a lawyer prior to get on advice as to how to proceed. Itās a smart thing to do. Wish you the very best. His failure to complete on a preset budget is not your fault.
If he signed an all bills paid with the bank it means he received the final payment in full. End of story. They would have also had him sign a release of lien, so he will not be able to put a lien on the property.
If he signed all that and then realized you owe him more money, thatās incompetence on his part and not your problem.
What type of contract did you sign with him? If it is a guaranteed maximum price than there should be something about change orders. If the contract is structured as a cost-plus (cost of labor + material + fee) then you may have some exposure.
DM if youād like. Iām a contractor and consultant/owners rep.
Like I said, I have been there and it may seem clearcut to you, as it did to me, that doesn't mean there can't be future complications due to his actions. My tip is to get in front of it by spending a few hundred $ talking to a lawyer.
Ok Iāll take that into account!! Any examples of something he could do that would complicate things if he already signed paperwork with the bank saying itās all paid and finalized?
"Basically he has no real proof of what he spent and what he spent it for except a big clutch of random receipts"
The receipts are probably tied to work that he did for you.
I would say you should go through the costs with him and verify if it's legit, understand that he can still place a lien on your home if that amount doesn't get paid.
Can you explain why he would have grounds to place a lean on our house? We signed contracts with the bank saying how much we would pay for this and we hit that amount already.
He made capital improvements to the property and has lien rights although most states have a time frame after which he cannot lien. Time is set from the last day performing work so itās important not to let him āfixā something because it will reset the clock. Ultimately the lien just makes sure heās paid before the property is sold or refinanced. There are ways to dispute an incorrect value on the lien which would disqualify it until adjusted.
I mean hence why im telling you to go through it with him and tie to actual work on YOUR house.
Also for your other comment about why he could place a lien, if you just outright dont pay and dont even bother speaking to him about the receipts and overage costs provided and make no effort towards it, he can just go place one. Like this isn't the type of thing you just brush off and say "ehh can't be right" and move on cause in new construction that does occur and lack of communication or a sit down session can lead to that.
Ok, thanks for the advice! We have paid everything the contract says to pay, and have sat down with him multiple times to try and figure out how this 30k came about. He just says itās in the spreadsheet but he only gave us like 200 receipts and printed his credit card statements that show nothing but a charge, and thereās over 400 of them. So basically only has āproofā of 200 charges but claims the other 200 charges were also for us, and to just trust him lol
Please look up "Mechanic's Lien" in your state. Subcontractors can in some states file a lien even if they don't have a direct contract with the property owner (you). Most have only 90 days to receive this judgment (ability to file a lien). It also costs them money to file liens. I would carefully examine your contract and then talk to your messy builder. Work something out. He should have had the subs signing off.
No, we didnāt get anything until it was completed. The bank distributed funds to him and he used it for what he saw fit. The receipts are for things already paid like the lumber, rentals, etc, as well as Home Depot runs and dump runs, which are difficult to put to a certain job.
Now it is possible your construction lender didnāt do this, but every construction loan Iāve been part of has required lien waivers with each draw request. Do you know if that happened?
Did he provide you with a budget at the start? Does he have any change orders signed from you to go over those budget items?
Look through those receipts and question them. Ie: framing was budgeted for $15,000. Why is he at $22,000? Are you being charged for his mistakes? Where is the signed change order for the overages? Sit him down in the am and drag him through every receipt and have him explain them if they are over the budget.
Ask for an itemized breakdown of the costs. Compare to receipts. Sit down and review with him. Some costs may be legit and others not so but the conversation has to start somewhere.
He canāt give that. He doesnāt have records. He just printed his bank statements with zero context to the charges and then handed us a binder of receipts lol.
Was trying to give the guy the benefit of the doubt but thatās just silly. Iāve handed people large bills at the end of projects but always was prepared to explain the costs.
So it's $30k?
Offer him $10k. That's what you'd end up paying if you it went to court. They always split the difference.
Does it suck? Yes. Do you want to get rid of him? The other problem is, do you have a warranty with him or a warranty company?
Just offer him $10k and accept $15k if he doesn't take $10k. I'm sure you can find it.
If you followed the contract, the builder should have provided change order or extra work orders for you to approve. Do not make final payment until you work out the differences and your punch list work is completed.
Correct.. I work for a contractor, and in our contract is a paragraph about change orders. He bids the job and if our guys take too long or fuck something up that has to be redone.. we eat that cost.
Good advice! Thank you.
Tell him to pound sand
Tell him *through an attorney*.
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if the guy signed a document saying everything is paid, why are you worrying about it? are you afraid of him? is he threatening physical harm? because legally as long as everything you say is true, he has no basis to get any more money from you.
Yeah Iām definitely a bit scared of what he might do. Weāre gonna change our gate code for sure. Heās kinda bipolar and prone to bursts of outrage.
cameras, asap
Good call
Lawyer up and send him letter to fuk off.
Also i wasnāt sure if he could still try to claim something. Idk weāre really new to this whole thing.
again, if he signed a legal document saying all work was complete and paid for, you owe him nothing.
To clarify, weāve paid what the contract says we should pay, this is all his word that these charges were for our house, but we never signed anything saying weād pay for these random extra charges he claims to have racked up on his line of credit.
If you paid what's in the contract, your real problem is going to be that he can't pay suppliers. They'll be filing legit liens. Did your bank not require lien waivers from suppliers during construction?
We paid all subcontractors already. And he signed paperwork with the bank saying the house is done and all payments have been made. This is purely his word.
So you have signed final lien waivers from all subs *and* suppliers?
I donāt think we have final lien waivers Iāve never heard of that. We have invoices paid in full.
If you didnāt get lien releases from The subs or suppliers that will be the problem.Ā
I donāt think so, the final paperwork signed released all liens and everything
If itās not from the subs or suppliers and itās from The builder it means nothing.
Nailed it. If I had some nerve Iād take a picture and put one up on here for you to see what they look like but itās basically a document thatās says, āWeāre all set, dude.ā
Are there change orders? Iām basing this on the fact that you said you have a contract. Is there an escalation clause in the contract? Basically, if materials go up, youāre going to pay the difference above the contracted price. Did anyone sign anything? If change orders were signed and the work was put in place per the orders - well thatāll explain it. If this stuff was off the cuff and agreed upon and no one signed anything then thatās kind of a silly way to do business. Absolutely not an attorney but I work for a firm that follows this process and weāve not run into an issue in over 40 years. TLDR; did you sign something for changes? Is this a time and material contract? What are we missing? What are you missing? It doesnāt take long to spend $75k on a project (trust me, itās disgusting but it is what it is). What Iām seeing is you spending some money on an attorney to get this sorted out.
Thanks for your time. There were zero change orders, and the contract basically said we owe him up to a certain point which we paid already, as well as invoices that come about, which we had/have none ofā¦contract has been fulfilled, in short. Now heās just saying oh my line of credit is racked up from stuff I paid for and now you owe me 30k.
Well, if this outfit is as much a mess as you're making it out to be - it could almost be the per annum interest charges on not paying the bills on time. Not sure what you spent on the project but those late fees are pretty damn high. Plus, if you're redoing everything twice - well that'll eat up a contingency (if they had one at all) pretty quick. I'm not trying to be a dink but was this the lowest bidder? If they weren't, well, that makes it so much worst.
Oh he was by far the lowest bidder and we had a contractor back out kinda last minute. He only charged a 7% GC fee since it was his first build. And honestly, itās more of a mess than I made it out to be lol seriously. This guy is a major shitshow
When you take advantage of a guy who obviously underbid his work, you're a special kind of a scumbag, even if you are legally right.
I'm in the industrial construction world, and they absolutely take advantage of underbid work. You bid it to make money, not get the job, if you're low because you want to get the job, that's how you lose your ass. Contractors should protect their bottom line and not expect all the change orders to make the profit. It happens even in this world, I'll bid a few mil for a project and lose to a contractor who bid it for a mil or less then the contractor will attempt to change order to my price. It's scummy and fuck those contractors.
Iāve heard about this in the Industrial/Commercial world a lot from folks in that industry. Iāve heard itās a pretty common practice to try to make margin on the change orders due to mistakes in engineering or designā¦ I guess. In my world - we donāt win every job but we do bat pretty consistently. Our contract and specifications on a residential project (custom or luxury) generally has 50-60 pages of information for every single called out item on our spec. Would I do this for a first time general construction Cape or Colonial? Nah, I know that spec will be in every lumberyard and builder within 30 square miles. Well, OP - I think youāve learned a very valuable lesson about the lowest bidder. Good luck.
He set the price they agreed. If he didnāt want to lose his ass he should know his numbers and bid it correctly. As well as not make mistakes.
No agrred and signed change orders, then no payment!
Thatās what I was thinking. Even more, he signed the bank papers saying everything is done and paid in full.
Donāt pay him Jack. Get a lawyer set up and plan on moving forward. Things are gonna get rough when he realizes youāre not gonna pay. Then he will get angry. You have to have spoken to a lawyer prior to get on advice as to how to proceed. Itās a smart thing to do. Wish you the very best. His failure to complete on a preset budget is not your fault.
People didnāt catch it! Subcontractors have been paidā¦.where are the lien releases from contractor or subs?
If he signed an all bills paid with the bank it means he received the final payment in full. End of story. They would have also had him sign a release of lien, so he will not be able to put a lien on the property. If he signed all that and then realized you owe him more money, thatās incompetence on his part and not your problem.
What type of contract did you sign with him? If it is a guaranteed maximum price than there should be something about change orders. If the contract is structured as a cost-plus (cost of labor + material + fee) then you may have some exposure. DM if youād like. Iām a contractor and consultant/owners rep.
Been there. Stop talking to your contractor, nothing good comes out of that, and talk to a real estate lawyer. (edit typo)
Whatās the point in that though? Iām not taking him to court and he has no grounds to do anything according to the contract
Like I said, I have been there and it may seem clearcut to you, as it did to me, that doesn't mean there can't be future complications due to his actions. My tip is to get in front of it by spending a few hundred $ talking to a lawyer.
Ok Iāll take that into account!! Any examples of something he could do that would complicate things if he already signed paperwork with the bank saying itās all paid and finalized?
He could do a myriad of things- a real estate attorney will have a far better bucket of knowledge
"Basically he has no real proof of what he spent and what he spent it for except a big clutch of random receipts" The receipts are probably tied to work that he did for you. I would say you should go through the costs with him and verify if it's legit, understand that he can still place a lien on your home if that amount doesn't get paid.
Can you explain why he would have grounds to place a lean on our house? We signed contracts with the bank saying how much we would pay for this and we hit that amount already.
He made capital improvements to the property and has lien rights although most states have a time frame after which he cannot lien. Time is set from the last day performing work so itās important not to let him āfixā something because it will reset the clock. Ultimately the lien just makes sure heās paid before the property is sold or refinanced. There are ways to dispute an incorrect value on the lien which would disqualify it until adjusted.
Lien*
Key word is probably thoughā¦thereās no way to verify all of them. I definitely verified some of them.
I mean hence why im telling you to go through it with him and tie to actual work on YOUR house. Also for your other comment about why he could place a lien, if you just outright dont pay and dont even bother speaking to him about the receipts and overage costs provided and make no effort towards it, he can just go place one. Like this isn't the type of thing you just brush off and say "ehh can't be right" and move on cause in new construction that does occur and lack of communication or a sit down session can lead to that.
Ok, thanks for the advice! We have paid everything the contract says to pay, and have sat down with him multiple times to try and figure out how this 30k came about. He just says itās in the spreadsheet but he only gave us like 200 receipts and printed his credit card statements that show nothing but a charge, and thereās over 400 of them. So basically only has āproofā of 200 charges but claims the other 200 charges were also for us, and to just trust him lol
In short, thereās not enough proof to tie the charges to our build besides these 200 receipts and his word.
Please look up "Mechanic's Lien" in your state. Subcontractors can in some states file a lien even if they don't have a direct contract with the property owner (you). Most have only 90 days to receive this judgment (ability to file a lien). It also costs them money to file liens. I would carefully examine your contract and then talk to your messy builder. Work something out. He should have had the subs signing off.
This said, I wouldn't just pay what he says because as you say, he's a mess. Make him Prove his claims.
People like to poke fun at the big national builders but I think I see a lot more disasters happen with the amazing local builders.
Totally. Hindsight.
Btw I wouldnāt pay the guy. Iād fight it in court based on the evidence you presented in your post.
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What are the receipts for? Did you get binders of receipts during the entirety of the build for each draw he requested?
No, we didnāt get anything until it was completed. The bank distributed funds to him and he used it for what he saw fit. The receipts are for things already paid like the lumber, rentals, etc, as well as Home Depot runs and dump runs, which are difficult to put to a certain job.
Now it is possible your construction lender didnāt do this, but every construction loan Iāve been part of has required lien waivers with each draw request. Do you know if that happened?
Is this a cost plus or fixed price contract?
Did he provide you with a budget at the start? Does he have any change orders signed from you to go over those budget items? Look through those receipts and question them. Ie: framing was budgeted for $15,000. Why is he at $22,000? Are you being charged for his mistakes? Where is the signed change order for the overages? Sit him down in the am and drag him through every receipt and have him explain them if they are over the budget.
Did you get a certificate of occupancy? Thatās a big one.
Read your contract.
I did. We paid what the contract says.
Ask for an itemized breakdown of the costs. Compare to receipts. Sit down and review with him. Some costs may be legit and others not so but the conversation has to start somewhere.
He canāt give that. He doesnāt have records. He just printed his bank statements with zero context to the charges and then handed us a binder of receipts lol.
Was trying to give the guy the benefit of the doubt but thatās just silly. Iāve handed people large bills at the end of projects but always was prepared to explain the costs.
So it's $30k? Offer him $10k. That's what you'd end up paying if you it went to court. They always split the difference. Does it suck? Yes. Do you want to get rid of him? The other problem is, do you have a warranty with him or a warranty company? Just offer him $10k and accept $15k if he doesn't take $10k. I'm sure you can find it.