You are doing a cost-plus custom, a high-end rustic weekend house, your client is an attorney, lives out of state, you started last fall, there are about four weeks left to finish, and he has been well behind in payments right from the start. There is no financing, although the client has been saying for the last three months that he may be financing part of the cost. You are currently behind by about $200k on a $600k package, with about $100k to go to finish. The summer season is about to be in full play, the client was told long ago that things would finish up about now, and he wants you to get it into move-in-and-use state, leaving a lot of stuff left to go, like basement finish, screened porches, exterior pavers, etc., which he feels you can do during weekdays when he and the family aren’t here. He wants you to get him a “contingent” certificate of occupancy.
What do you do to assure yourself of getting paid?
Replies
For you, it isn't hypothetical, is it? so I'll try not to treat it as a joke.
For me it's definitely out there in hypo land because there is no way in this world that any lawyer is going to get his hands into my pocket for 200 Grand.
I tell him his jokes aren't funny any more and there is no more money to get anything done, including hooking up the contingent sewer line so it's time to pony up.
Excellence is its own reward!
No, it's not me. But yes, it ain't hypo. It's real.
I'd tell him that I'd be more than happy to get him his contingent C.O. and do more work on the house as soon as he got current with his bills, and put the remainder of the funds in an escrow account.
Like Piffin said- bad news to have gotten that deep in the hole to begin with, but even worse to do another lick of work without getting paid to date. The builder's in a fairly good position, though- the client can't use the house without the C.O, which makes it pretty useless for the summer.
Bob
Use the carrot and stick approach. He wants to be able to use the house this summer (which is now) and the hypo-you wants money. So get the house to an almost move in condition (leave out the sewer and elect connections) and tell him as soon as you get current and escrowed like someone suggested, you'll finish the job. And then be prepared to wait him out, all the while preparing the lien papers.
Do it right, or do it twice.
Not being a fan of attorneys, Id make sure his account was up to date before even suggesting the ability to file for a C of O.
As someone has already mentioned, lien papers should be awaiting contractors signature.
J. D. Reynolds
Home Improvements
"DO IT RIGHT, DO IT ONCE"
Mr. Micro ---
If you have a contract, follow it. It should say when payments are due.
If he is current on his required payments, you are out of luck.
You can wind up in a lot of trouble refusing to finish a project because you want money not yet due.
No contract. Handshake.
Sounds like he shook with one hand, and grabbed your *^*&^ with the other.
looks like it could be time for "My lawyer is bigger than your lawyer".
Bring in your own lawyer to go over everything with you and make sure all your legal ducks (and rights) are in a row before you get too deep into confronting this guy - he may be a great guy and everything's gonna be ok...
or he could be like the other 99% of lawyers, and hilarity will definitely not ensue!
When dealing with lawyers, having a lawyer (on your side) to guide you is VERY IMPORTANT. They spend all their energy learning what they can get away with, and how. It is their job. You and I spend ours on just building things and creating things and can be easily tricked / snookered by the likes of them.
$200,000 is a lot of money for a customer to "be behind" in payments.
I do not mean to hire a lawyer and start throwing stones with him. I do mean to hire a lawyer to guide you and coach you in what you can and what you can not do in your situation. It may only cost one or two hours of his (very expensive) time to gain this VERY valuable information. Then you can approach your customer with a game plan that is well informed and most likely to work for you.
Good luck and KEEP US POSTED ($200,000 is a lot of money...)
Norm "I am wary of lawyers" Kerr
then it's "oh sh*t" time
Edited 6/5/2003 12:22:08 PM ET by Wet Head Warrior
Mr. Micro, I wish I had some advice, but the guys are pretty right on as far as I can see... NOW is the time to address it. A little lesson from a guy I interviewed awhile back to make the point. He was a small builder doing a lovely Bow Cape for a client who -- it so happens -- was also his accountant. This accountant "friend" of his got behind in payments and moved into his new house... still behind in his payments. Whereupon he decided he didn't want to make his 40K final payment. This fellow went out of business.
Did he Lien the property? Of course. But as he said... "this guys gonna die in this house", and this builder will never see that money. I think about this alot when I'm close on the $. This was a good guy, with a nice little business. He built this man a fine home. His dream home, in fact. When I met this guy I told him I was, actually, impressed with his ability to move on from that. To my mind, it's worth spending a couple of grand at that point to have the guys legs broken... and forget the money. But that's just me.
Best of luck, and do keep us posted. If you're in MA, I know a couple of good lawyers.
Brian
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