Solvency of General Contractors
Discovering that the contractor you hired has run out of money can be a frustrating and disheartening experience. It’s especially alarming when you’ve already paid more than 50% of the contract amount, but only 5% of the work has been completed. Unfortunately, this is a common issue in SW Florida, where predatory contractors often take advantage of homeowners. The consequences can be devastating, leaving you with a delayed remodeling project, unpaid subcontractors, and even an unfinished or unbuilt home. In this section, we will delve into the challenges faced when encountering such situations and explore potential solutions to navigate through this unfortunate scenario.
Your Contractor is out of Money
The first item to uncover is discovering the items actually paid for your project. Since you are in a situation (you never asked to be in), you cannot take this at face value. You have to request a list of items the contractor paid with the actual invoices. You then need to call to confirm the payments were made. If this goes to court the information will be divulged. Trying to work this out is the best situation for the builder and yourself.
The Workout Option
Once you figured out how bad it is you have two options, attorney and court or try to work it out. Both options suck but if it is possible to work it out that will most likely offer you the most return. Legal battles are costly and if the contractor is out of money and you win, what would you expect to gain?
Finishing your project is the best situation. The path forward would result in the contractor providing labor to cover the amount of money stolen from your project. You need to pay for the materials and subcontractors directly to assure they are actually paid. You will make the contractor source the lowest cost forward to finish your project and you will make sure they are providing you full cooperation to see this through.
The Legal Option
This path is costly but may be your only path, NOTE: we are not providing legal advice and before committing to either option you should always consult with your attorney first.
The discovery process will uncover what was paid and how your money was spent. Most likely they used your money to pay bills from past projects and cover operation overhead. Depending on how big that hole is will determine your outcome. The downside of this process is time. It takes time to get this to court while you spend money. Your project will sit longer unfinished while you wait. There is a chance the court will require the contractor to finish your project if they do not have the cash to refund you but the capability to finish. Hopefully when all is final you are able to recover some cash.
Protect Yourself
Try to be as proactive as possible. Make sure you know what is included in your scope of work and the values used to create your agreed cost.
Pay only for work in place, deposits are always required to purchase items and legally the deposit you are requested to pay should only be used for supplies to start your project. Have discussions of what has been purchased, windows have long lead times and need to be paid prior to ordering, plumbing fixtures need to be present for plumbing roughs, cabinets, stone/tile, etc.
Most of all make sure when you have paid or are about to pay your contractor that they have performed the equivalent of work in place. If there is no action and you have paid a great amount then you should reach out to an attorney and see what your options are.
Proactive is the best protection.
If you find yourself in a situation where you need a second opinion, please feel free to give us a call 561-597-0021 or send us an email at info@iridiumdev.io