Problems with contractor

[Clenvic Cayme]

So me and my brother recently got our first deal in November. We interviewed and got quotes from several contractors, and one of them seemed to be by far the most knowledgeable and reasonably affordable. He was also recommended by a seasoned real estate investor that we knew so we went with him. At first everything went very well, he was on top of his game and was doing work extremely fast and in high quality. The problem is that around December he had health issues. He got pneumonia and has developed adult onset asthma. I know this may sound like BS, but my family is full of nurses and they can tell that he is genuinely sick. We tried to be understanding with him and give him more time but it seems like he's just not healthy enough to finish the project. It's been 4 months and the initial time estimate was 2 months. We are getting weary and want to put the house on the market. 

We've now told him that if we can't see significant progress in the next week we're moving on to another contractor. The issue is we've already paid him $30,000 out of the $41,000 initially quoted for us. The issue is I'm not sure if he's going to give us all the material like he promised, since he still hasn't been paid $11,000, he could just say the rest of the material was in that next payment. 

We really want to stay with him since he's a good guy, but every time we talk to him he says it'll be finished in a week or two and then we check up on the house and there's barely any progress. 

What should we do???

[Barry Ruby]

@Clenvic Cayme

Do you have a formal contract with this GC? If you don’t this was your primary mistake. A binding agreement with a GC is critical on many levels.

Spelling out issues such as pricing, scope of services, payment amounts and progress of work, insurance, bonding, indemnification, dispute resolution, penalties and prevailing party provisions to name a few.

Rule 1: never let the GC get too far in front of you payment wise. Never pay a large up front chunk of the contract price (doing so gives the other party all or too much leverage and is a disincentive for them to complete the job as it was initially structured).

If all efforts to get the GC to perform as agreed fail, your only recourse with or without a written contract may be small claims court depending on the laws in your state concerning such matters.

I can share a contract I have drafted with you. Let me know how I can send it to you if it does.