Dealing with a bad contractor

[Leland S.]

After paying my contractor 35k, I found his interior work was pretty shoddy. I already had a few issues with the contractor I pointed out and ask for discounts or refunds, but none were ever given, they just acknowledged my complaint. Once they completed all the concrete, plumbing, electrical, and framing which seemed like quality work as far as I could tell, except for the several issues I took up with them, they got to doing interior work. I got to inspect their interior work mid way through and found so many issues it was troubling. I took pictures of all kinds of issues: damage to most of my new cabinets they installed, electrician replaced a bunch of new lights and fan I had a prior contractor put in, wood trim was installed poorly unevenly cut, drywall finishing looked terrible, the plumbing they roughed in didn't line up with the vanities they knew were there to be measured... among many other issues. 

When I sent them the list of issues they just said they aren't complete the work and to pay up the last invoice (for the work that mostly had the issues) and they will complete the job. 

They have permits pulled on my place now and haven't received final inspections. So I'm worried if they pull out, aside from being stuck with paying for all the damaged stuff, I may have the city say other stuff doesn't work or wasn't done right by the contractor. 

It appears this company just wants their money and doesn't find any obligation to my satisfaction or their quality of work. Several other times they did things wrong they just sent me a new bill with their laborers hours on it and when I asked if they discounted the invoice to compensate for the work not done to spec the first time they ignore or dodge me. 

What's the best path forward where I lose the least and give myself the best advantage? 

BTW, I'm trying to flip the house and have been rehabbing for 5 mo now and want to put on market next month asap. I'm already like 2.5x my budget, hoping to get my money back to payoff my debts.

Experienced advice is appreciated...

[Ritch Bonisa]

If your contract allows for it - get rid of them today.  I work in project management for foreign and out of state investors on remote rehab projects, and work with a lot of contractors.  I think the key is to weed out the bad one's before you ever get started.  Selecting the right contractor can make or break your deal.  If you can ever do background checks and credit checks on them - it helps a lot. That's what I do.  I look for violent crimes and crimes of theft, then look for past lawsuits on the credit side.  Probably cost you no more than $100.  Also consider placing in their contract a clause that forces them to provide documented reports.  If you set a contract up with completion dates and phases of completion along the way, then require reports that coincide with the phases - it solves a lot of problems.  Also, make sure you pay them per phase of completion.  This all reduces the risk of losing money to an unethical contractor,  and also allows you to fire a contractor and get a new one a little bit easeir.   I don't have many contractor problems.  There are all kinds of other things I do to ensure we're working with the right contractors, but these are just some added steps you can take. 

The raw truth is when you find a good GC - take care of him, even if he costs a bit more.  Just figure that cost into the equation in determining your next deal.  You might have to pass on some deals. Just don't be in the situation where your margins are so thin that it all depends on the contractor to hit your numbers.