Hi all, have a situation here where the contractor that did the work on my property is now threatening to file a lien and also call the city for multiple code violations because I am not agreeing to pay the full amount of his last draw. Here's some background. I' m not seeking formal legal advice, just thoughts and opinions from people who have dealt with **** contractors that have tried to jump scare them and how they would handle this situation. 

I hired a contractor a few months ago to rehab a pretty beat up property I just bought. It was supposed to be done in 6 weeks but the contract stated 8 weeks. Fine. But the project went 2 months overboard. There were multiple days, and even weeks, where no work was performed at all, no progress made. I'm out of state so I relied on my project manager to walk it. By week 4 it was clear that he and his crew were slacking but would never provide answers as to why work wasn't done, even though it was pointed out to them. He then started to evade us - phone calls, texts, wouldn't show up at the house when we walked it. Before you say I should have fired him (I wish I did) - I fronted all materials so he had that above my head. It's my first big rehab & brrrr so lesson learned and there was no bonus/penalty structure embedded in the contract. As the project went onwards (and consequently remained delayed), his communication and attitude got even worse. We just didn't know what the hell was going on but we were deep in it it with him and it would be taken more time to get someone else in there to finish it and costlier as well. So I had to stick with him. I missed about 7 weeks of rent on the 2 units (it's a duplex), lost 1 tenant who - because the unit wasn't 100% ready like it was supposed to be - decided not to move forward, and was at risk of losing the other tenant because his move in date kept getting pushed off, had to live without water once he did move in, and dealt with a lot of disturbances all due to this contractor and his negligence to just finish it on time. 

Today the work is finally done and the second unit's tenants moving in tomorrow and he has been haggling me to pay him his last draw combined with some out of scope work for a total of 8k. I have been keeping track of all expenses in and out of scope, all change orders, and payments made. From the 8k I deducted all the rents I missed out on due to his failure to not finish by the date in the contract (I prorated it carefully) and I deducted work that was in the original scope that I paid for but was not done (either due to the tenant already moving in and not wanting to be disturbed or just not done properly). The final total came out to under 2k. I knew this would be upsetting to him but thus far I've been good on all my payments, I fronted materials + first draw before work ever began, I paid other draws and change orders before work was even completed despite the awful communication, delays, and just blatant disregard for deadlines, timelines, and tenants. He just did not give a F*** throughout this project and only did work when he wanted to, was accessible only on his own time. Me deducting from his pay was not out of pettiness but out of - I thought - justified reasons. We signed a contract. He didn't uphold it. And this is the consequence. I am not deducing the additional interest I've had to pay for privately borrowed money, extra project management fees, taxes, insurance, etc that I've had to pay due to the delay. 

He is now threatening to place a lien. I said okay, take me to court because I have the contract and other proof in writing, as well as pics of unsatisfactory work. It is unclear if he's licensed or unlicensed (I did ask my PM to verify this) but he did all the electrical and plumbing work on the house - and did not pull permits. My assumption is if he tries to file a complaint against me then it gets revealed that he didn't do things by the books either. I can say I didn't know any better? The contract has language that states he will pull all necessary permits needed, and signed off on that, so I think that makes him liable. I think for the most part he's bluffing and trying to scare me. The one thing I'm uncertain and a bit nervous about is - if he does call the city, can they just take his or really anyone's word and do an inspection? The house is old. It's in Ohio. Many, many old houses in the area and city and region really are not up to code - but that's not to say it's unsafe. Rather, I have approved any and all work that has come up during the rehab outside of scope to make sure that the home is safe for people to habit. But not sure if the plumbing is up to code because of old pipes, and there was no reason to redo the entire system if it was functional. Now according to the contractor, he says electrical, plumbing, water main, foundation is all violating city code and that they'll come and tag this house as unlivable and I'll have to pay many fines along with not being able to collect rents.

What are your thoughts on this? Any action I can take or do I wait & see if he actually does place a lien, or wait for the city to call me?