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advice for issues with collecting final payment

6K views 103 replies 45 participants last post by  OggieOglethorpe 
#1 · (Edited by Moderator)
So I have had this issue with collecting a final payment. It is from a high end builder who is building 3/4 million dollar homes. He does not seem to be broke or anything that I can tell. We completed the final punch list at the end of April. He paid us but held a 20% retainer fee which totals just a bit less than 5,000.00. It is a large amount of money for us. It hurts just knowing this money is owed to us.

So I have emailed him the final invoice 3 times. My wife called him last friday and he advised her that he was in his office and would work on getting the final payment sent to us that day, which was 7 days ago. I don't have an attorney but have considered getting an attorney to send the builder a letter requesting payment. I have not dropped by his office yet, but have considered doing just that. I am not a very confrontational kind of guy though so before a face to face meeting happens, I will need to be confident in what my exact rights are so that I can speak intelligently.

As far as I know there are no issues on the job. I have several photographs documenting this job, in fact it is one of the best jobs we have ever completed. It turned out extremely beautiful so it is hard to fathom someone ripping us off on this job. Both the builder and his Project Manager advised me everything has checked out good.

I typically do not run into this issue. Most of the time customers will pay out when the job is finished. Most of our jobs are with owner builders or owners who are remodeling so I am typically dealing with an owner.

Not sure if there are any good words of wisdom here. I am going to consult an attorney.
 
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#27 ·
My money says he gives you the run around again. I wouldn't accept an answer like , " I'll send the check out tomorrow".

He has already lied to you on several occassions.

Anyway,good luck. Hope you are successful in getting paid.

Keep us informed. Its all kind of interesting.
 
#29 ·
I've known a few cabinetmakers and trim carpenters that built that final payment into the rest of the contract. That way, when they got stiffed for the final payment, well they already had the money. If they get the money, it's like an extra Christmas. So, it's the way a lot of people do business.
 
#31 · (Edited by Moderator)
Lots of good Ideas, a strong contract with getting paid ahead of the contractor so that a check is in hand before final installation works best. I agree with getting a lien on the property and filing a small claims against him and the owner,this way he has two people on his case.
I had a friend who had a similar problem and after weeks of trying to get paid some howall the doors disappeared off the job 30 in all. When the contractor asked where they doors had gone my friend said he didn't know but that he could make new doors and match the stain perfectly for about $ 800 more than what was owed,of course it required cash when the contractor came to get the doors, Some how (wink wink) my friend had the doors ready in only 2 days finish and all.:))
 
#32 ·
Any attorney will tell you to go talk to the contractor and try to settle it before escalating it to legal channels, because it often works. A good one will tell you that for free, and a bad one will charge you for that advice too. If you don't walk out with a check then go see the attorney and/or file the lien. He's probably pushing you to see how far you'll let it go, but don't waste your money if you don't have to. Checking in with an attorney on the right way to file the lien should be pretty cheap though. Ask first how they charge.

This isn't just something contractors do, it's common practice in fortune 500 companies to have a 90 or 180 day or more wait policy before paying accounts payable. The longer the better for them and they push it more with smaller companies they owe. This guy probably has a number in mind that he's waiting for or he's waiting until it's too late for you to file a lien. Hard to say which but the more you let him know you're serious the more chance you have of getting paid. You'll probably get more respect too.
 
#35 ·
Go ahead and file the lien Jerry. And if I have had to file a lien against a contractor/ property owner in the past but I still thought that I would do business with them, I would file a lien up front, after the contract was signed. It's a nice way of letting them know how much you thought they appreciated doing business with you the first time. It's worked for me so far.
 
#36 · (Edited by Moderator)
Jerry: I sell for a mechanical contractor, and one of my other duties for the MC is to take care of really late payments.
Here's the deal - forget the attorney, you don't need one right away.
As long as you have completed your punch list, what is happening is you are the victim of a builder who tried to cut his profit a little thin, and now is just not paying out to some of his subs in the hope that they will just go away and write it off. Seen it a lot of times.

Here's the process:
First, go to your county courthouse, or the county where the house sits, and file a lien against the house and the builder. In my state, Tennessee, this is about $12 depending on county. Also, find out how long the liens are good for. In the two major Tennessee counties where we do most of our business, one county is only one month, another is 12 months. (The length the lien is in effect). When we do business in the state of Georgia, we were happy to find out that liens are forever, until we remove them. This means as soon as he sells the house, the bank has to pay your monies because the bank will do due diligence on any liens, and yours will pop in the state computers.
If you do not have an interest charge listed on your initial contract, you cannot add it after the fact. We learned this the hard way, and now have a suitable interest charge for non-payment after a certain date on all of our contracts. So far, it has kicked in once, and boy, was that guy pissed but we got our money.
After you make sure the lien is filed within the proper time period, (these things do have limits, depending on where you are in the food chain, and subs do have a clock on them), then you have to sue.
You can do this usually with a one page form available at the same courthouse you got the lien at. I've done it a number of times, and it usually takes a one paragraph statement on the form, with some legal stuff that is not hard at all. Example: When we sued a guy over a hotel in Georgia, the county constable delivers the lawsuit. (The lien was in place, but he had no intention of selling the hotel, so that was not of much use.) Usually this delivery is enough to make them pay right away, and the Georgia guy sent a check the day he got served by a person with a badge. But one guy resisted us in Hamilton County, Tennessee, and we had to go to court.
Still no attorney to this point.
When we showed for the court date, there are attorneys who just hang out at the courthouse waiting for business. They specialize in small stuff like this, and always have fixed rates. We got a guy to do it for $300, and we went in. Obviously the builder was not there even though we was served, and we won.
When he got the judgement in the mail, he tried like hell to get us to accept the $6000 plus interest he owed us, but at that point we had turned it over to that attorney, who added 20% to the total for a total of $7200 plus interest, now about $8000. He squealed like a stuck pig, but we got our check.
I've done this a number of times for my company, it will happen, and if the work was done, and the punch list is complete and finished, you WILL win.
Good luck, and welcome to the new world!
By the way, we kept that initial attorney. We never talk to him so we don't get charged, and if we have a late payment, we still do the lien and lawsuit ourselves, and only give it over to him before the court date so he does the appearance and we can keep working. He gets his cut, we get our checks.

Paul
 
#37 ·
i deal with the public everyday in my job,sometimes i have to collect over due balances.i've called people and get the same i'll mail it blah,blah,blah.it has always worked for me to show up and talk face to face.i'm not confrontational either but i like to deal good or bad face to face.then if that don't work you can put a lien on the property.i'd add late fees to the bill each time i sent one to him.hope you resolve it without to much more problems.
 
#38 ·
Thanks guys, well Moday should be telling. I think I will go to his office in the morning. If no check then next stop is the court house to complete paper work for the lien and also small claims court. Hopefully a quick consult with a local attorney before I begin my day. Thanks everyone.
 
#40 ·
Uh, once the cabs are installed, they can't be legally removed as they have become "part of the property". A lien won't necessarily insure prompt payment, but will preclude a clean future sale of the home. At least that's they way it is here in MS.
I'd lawyer up in a heartbeat.
Bill
 
#42 · (Edited by Moderator)
Problem with a lien in this case is the contractor doesn't own the house. He is leasing it back from the home owner. (probably to keep from paying liens) I have a friend who owned a band, they played at a bar, the owner refused to pay them. She went to small claims court, got a judgement. He still did not pay them. On a Saturday about 11 PM she showed up at the bar with a sheriffs deputy and cleaned out the till.

I would call him today, and leave a message that If you do not have a check in hand by 2 PM Monday you are going to have to file in small claims court Monday afternoon. The reason I say 2 pm is it gives you time to do the paperwork for a small claims case or go to the bank and cash his check. (make sure you cash it at his bank, don't deposit it at yours) be polite, be nice but point out that your a small business and can't afford to not be paid in a timely manor. Small claims is a do it yourself thing, just you and him and the contract.

Make sure when you file the paperwork it names him and his company.
 
#43 ·
Jerry,

Once you decide on a plan of action, make sure you follow through to the letter. I agree with setting even the time of day this matter has to be settled.

But whatever you do, you have to do exactly what you said you where going to do or it won't mean a thing.

He's ripping you off; you know it and he knows it.

Whatever your legal rights are, follow them to the letter!

A judgement or a lien can take forever to settle. I would also file a complaint with the Better Business Bureau.
He will get notified by the Better Business Bureau and if it doesn't get resolved, it stays on his record until it is with the BBB.

Also you can notify other sub-contractors to let them know how he works, but don't be surprised that you aren't the only one he's trying to screw out of some money.

You can damage his reputation just as easy as an unhappy customer can hurt your reputation.
 
#44 ·
I agree with Makarov that a lien might not work much magic in this case since the house has already been sold. I would go with a friendly face-to-face meeting first. Depending on how that goes, you might give him a deadline and tell him after that you are going to small claims court.

Aside from contractors frequently stringing their subs along on purpose, or blatantly trying to rip them off, there is another explanation I've seen far too many times. Many contractors (even huge ones) do not keep enough working capital to run their business properly. They are constantly robbing Peter to pay Paul by taking the money they are paid from one job and sinking it into their next venture before all the subs have even been paid in full. Then they have to wait for the next payment to come in from someone else in order to pay off the subs from that previous job. It's not the right way to operate, but I see it all the time.
 
#47 · (Edited by Moderator)
^ That isn't likely to work. I had a contractor abandon a job partway through, then demand additional money to finish, because he said his costs had gone up (not to mention any names, but his name is Charles Montoya / Rock Creations in Bernalillo, NM). I contacted my state contractor's board, and they said they don't get involved in contract abandonment issues, and in fact, don't get involved at all until you get a judgment in the courts.
 
#48 ·
JJ in Oregon you wouldn't have a problem,the courts here require you to have a arbitration through the builders board before proceeding through the courts. Having family in Texas it seems that it's not even necessary to have a contractors licence in Texas so I would guess they don't have a contractors board.
 
#49 ·
I would call and say you coming for final payment.Go to the office and wait until he pays you dont leave till you get payment.If they refuse give them a bill with a late fee if you think he is never going to pay remove what you did.If you are liscened put a lien on the house.I have had this problem with highend customers and as a result will never work with a contractor again.I actually had to bring in my bobcat once park it outside the guys kitchen and threaten to demo the house to get my products back.I dont recommend that but it is hard watching people that are really well off not pay theyre bills.And most contractors I have met could care less about paying or respecting others in the business majority are con men.
 
#50 ·
The home owner is not going to like having a lien against his property. The builder probably had to be provide a lien release sating all subs had been paid at the sale closing. Not sure how is it with small builders, but i have had some success with the mere mention of notice of intent to lien the property of some of the world's largest largest corporations . Nobody in the sub chains wants to be the cause of that one ;-))
 
#51 ·
I'm in the middle of a similar issue regarding approx. $1,000.00 owed to me by a contractor that I subbed work from. I'm knocking on the homeowner's door on Monday, explain the situation and tell him that I have no option but to lien his property. I'm hoping he will contact the contractor and aid in collecting the money owed
 
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