Emergency / Mitigation Services Price Dispute - Hurricane Michael

[Kevin Wattenbarger]

Greeting Bigger Pockets:

I am looking for advice on how to handle a pending situation from a restoration contractor that provided services shortly after Hurricane Michael hit the Panama City, FL area.

A few highlights:

I made contact with one of the larger restoration contractors in the area who was overwhelmed and was referred to an out of town franchisee.

This involves a small rental property (approx 1500 sf)?that was severely damaged from the hurricane.

The group started work on demo and tenant contents removal prior to receiving authorization. I was waiting for the tenants approval for their contents to be removed before granting the vendor work authorization. I have insurance on the property and did sign eventually sign a work Authorization form and provided my insurance company and claim information after they were already in the property. I was never provided with any type of estimate and now I don’t believe the contractor made contact with the insurance company until after they finished at the property. Fast forward, the insurance company is stating their $40k bill is overkill and is offering to pay less than half. The contractor is threatening to lien the property unless they are paid. I don’t believe they have accepted any payment from the insurance company and has sent me their repair estimate and claiming it’s their bill.

I am not one to get excited by the threat and if anything this hurricane has taught me it will take a long, long time to recover. This isn’t a quick process.

In the event the contractor does file a lien, I do not think it is valid. While I did sign an Authorization form and not an (AOB the they were pushing), I don’t believe I provided a blank check. They was a clear expectation for them to contact my insurance company. Our request for an estimate was never fulfilled and I was under the illusion the contractor was in communication with the insurance company at the time. I never would have approved such a high price to essentially demo the property down to the studs. There was no restoration.

I do have a mortgage on the property that exceeds the restoration contractors estimate claim. The property is currently down to the studs and is not habitable. It has been a good rental property in a good rental area. I’d like to get the unit repaired and back into service. I don’t have plans to sell anytime soon.

Should I let the contractor know that I am going to dispute their bill to try and delay their attempt to file a lien? Or should I wait and see if they do actually file and then contest through legal channels? If my insurance company thinks their bill is excessive, why should I feel any different? Would you be working to get the units repaired at this time or pause and see how this plays out. Anyone who is in the communities impacted by Hurricane Michael knows that we are overwhelmed by the damage and there is a shortage of contractors available. I am personally dealing with many damaged properties and insurance claims. This is not at the top of my priority list but don’t want to hurt my position by delaying or not contesting their claims appropriately.

Any thoughts or advice on the situation would be greatly appreciate. #850Strong

-Kevin Wattenbarger