contractor lies

[Jeff Brandfas]

Frustration is building on my first flip.  I hired the lowest priced contractor out of three (learning that really is a bad idea) and he claimed he's never taken longer than 5 weeks to do any job and certainly wouldn't take longer than 6 on mine.  I got about 3 solid weeks out of his crew until it seemed his progress was slowing to a crawl.  I had got in the habit of only stopping by the house once a week because he seemed motivated to continually make progress as he promised at least 2 workers/8 hours a day.  Well the first sign of trouble happened when a week went by where the only difference was the drywall was in progress on the walls.  I questioned it as nice as possible and he went on to explain drywall is very difficult to get right, especially on this house.  I accepted his answer and waited close to another week to check again and saw that the only difference was the ceiling was textured.  Again I politely questioned it and accepted another excuse and just vowed privately to check the house more often to ensure signs of progress.  Checking daily, it was obvious he had either not had anyone show up or did very little.  The trend continued up to the point it was 8 weeks in and he asked for a $5000 advance on the final payment I would owe him (I had given him 2/3 payments to this point with the agreement being he would get the 3rd at finish).  This obviously made me uncomfortable due to him being way behind with no end in sight (Other than his horrible time line guesses) so I decided to offer an addendum to our original agreement.  (This proved to be a horrible mistake as it just ruined our relationship and made him bitter toward me to this day).  The addendum basically put a due date on the end of the project (his estimate +1 week) which would then accumulate a daily penalty of $50 a day off the final price owed to him in return for his $5000 advance.  After dealing with his temper tantrum I gave in to his $5000 advance without the addendum. which motivated him for about a week and now it's back to excuses and lies.

Currently I would owe him about $10k upon completion. My first instinct is and has been to let him go and accept the loss but it seems every other contractor in the area is tied up for at least a month before being able to start any new work.  Plus I gave him an out of contract $4000 (half of an agreed $8000) to purchase siding which he claimed was ready for pick up 3 weeks ago but now saying the company doesn't have it available yet.  My second instinct is to look in to legal action as I have everything in contract from his agreed working hours to estimated time line but in truth this seems like more headache than i want to deal with.  I really just want him to finish the job but he's claiming that he's already going to take a loss on it so I don't have much faith that he cares to get it done any time soon.  

I'm really not sure what I should do.  I have a 5 month hard money loan that will jump up in fees and percentages significantly after that time.  The project is 13 weeks in so with the time it will take to find a buyer and close, even if i could list today, will likely go past the 5 month mark.  Any advice or comments is appreciated.