Flip gone bad - Contractor scam

[Dan Jones]

I am having problems with a flip. Basically, I did everything wrong. I entered into a JV with a guy who was going to act as project manager.

He started the project before I signed an agreement with him and before I had agreed (I asked many times to refine and finalize it with specific feedback) to an SOW. I am not sure if he ever showed an official SOW to the GC and I suspect that there is no written contract with the GC.

The GC made fast progress on the paint so I wired 4K to my JV partner in good faith. I kept asking to get the signed agreements and SOW, but kept getting excuses, etc.

Fast forward a bit and things went south fast, still no contracts (as far as I know), I wired another 4K, and now all work stops.

The GC said that he never agreed to the things in the SOW my JV partner shared with me. He said he is 90% done with the project and needs a payment, that my JV partner requested 3K of additional items (what was the original agreement? and the additional items? was all this verbal?), etc, etc. and he is now threatening to file a lien.

The project is no where near 90% done. Maybe 30-40% done.  

He (his office assistant) said the agreement was for 10K.  I am not even sure if he wants 90% of 10K, 90% of 13K, or some other number he will make up if/when I hear from him again.  

It sounds like the GC is pulling numbers out of the air. He will not return my calls. I got all this info from my JV partner and one conversation with his office assistant.

Also, I am pretty sure he is not licensed which is a major problem since I can't pass inspection from the city unless he is licensed and pulls permits.

I feel like I am getting scammed from all ends here and would love to hear some advice on how to protect myself at this point.

IMO he has received more money than work completed (at inflated pricing).  

I would like to get a different contractor to finish the job, but I am concerned this guy will file some huge lien against me saying I owe him a ton of money.  

I took a ton of pictures to document the "lack of" work.  Is this enough?  Should I get another contractor to write some kind of affidavit.  Do I need to get an attorney at this point?

This is in the Chicago Illinois suburbs if that helps at all.

Thanks

[Prashanth Mahakali]

Dan,

Sorry to hear about your experience. Its never good when partners dont return calls. Its very frustrating and I can related to this from my first rehab project. 

Moving forward, it looks like you have all the information you need to pursue legal options. While you do that, I urge you to spend 80% of your time in focusing on how to move the project forward and 20% on pursuing legal options to get money back. While choosing your next contractor, visit their job sites and talk to them and their references. I look for clean job sites as a good sign for a general contractor.

Contact the village and place an alert on what happened so they know to watch out for him in case he tries to do business with the village. File a complaint at bbb.org. 

The fundamental mistake that most investors make is falling for the bottomline by hiring unlicensed people for low costs. Get educated by visiting the local big box building material store and create a commercial account. All materials are purchased through your account so you know exactly how much is spent on materials. 

 Get a licensed Architect and contractor as part of your team. Verify licenses at www.idfpr.com. Ask them to show copies of licenses and check status of the license with the city. All of this takes a few minutes and phone calls. 

Lastly, try to get even by completing the project. Its all the more critical now that you finish the project than getting even with the GC. Good luck and share your experience with others!