203k deal is going very poorly, advice?

[James H.]

I decided to jump into the deep end for my first home purchase project, it is much deeper than I wanted..... I purchased a property for 129k in August of 2018. It was in pretty banged up shape but didn't look outrageous to replace. The total loan amount is around 298k including contingency to get it all done. From the get go, the primary focus was on tying into the sewer system since it has a septic tank now, which is failed. I finally got that process in motion and have the permits from the state EPA for work to start on that once the engineers wrap up. The expense for just that will be somewhere around 30-50k (engineers, water crossing permits for the stream, excavation, old tank removal, more permits, etc.). The contractor showed up for a township meeting and sent in a few checks to keep things moving along but didn't do much else in the way of coordination. I have been project managing this whole thing. ARP is somewhere in the 300-400k range. It's a special parcel of land because of the water way and community and the school district.

I'm pretty handy with carpentry and some masonry so I got to work on the rest of the house in the meantime while the sewer saga played out. There is a lot of smaller scale carpentry work that needs to be done, which I have been doing. But....the way the stucco was done originally, in the 60's means that they didn't use a weep screed and around the entire house the sill plate, rim joist, and at least some of the joist ends are toast because of the water that got into the walls and couldn't drain or vent anywhere. The foundation is hollow block and also in seriously bad shape, which was hidden behind finished basement walls. These oversights are due to my inexperience (which I am wising up to pretty quickly) and incompetent people who have been working on it. The 203k consultant didn't find the foundation a concern at all and mentioned smearing concrete over foundation cracks to fix the one that was visible. In reality, and knowing more now, there are vertical cracks near the i-beam, pushed in walls, horizontal cracks, a lack of a sill plate in some locations, etc. I didn't know and they didn't know, and there was much hidden behind some finished basement walls. It has been a massive oversight....I consider this my 1 year accelerated renovation PHD program. I digress....

My general contractor is very poor at responding/communicating and I deeply regret not doing more about this sooner but since August this is what he has done:

• replaced the shingles
• replaced the heat pump unit
• sealed the flat roof with elastomeric coating, but got the silver material all over the dark brown gutters so it looks horrendous
• Replaced the outside A/C unit
• Replaced the well motor/pump, but no further testing of the well or plumbing has been done.

This is what I have done (keep in mind, I have a full time job and also run a small side business):

• Built a new front door from scratch (it was pointed and not rectangular so no off the shelf options). Had to get custom locks and learn how to do that since the locksmith wanted $1500 alone because of the odd dimensions and backset
• Demoed the interior and single handedly filled two flat bed dumpsters, need atleast 1 more for the trash still present 
• replaced the wood siding and framing for one of the balconies, will be laying down the epdm waterproofing this week
• Bought a few french doors from craigslist, which happened to be the exact size I needed
• installed a new cross beam section (old one was rotted and sagging) above the old 4 panel french doors
• I also removed the stucco from most of the house and am putting up new plywood and homewrap on as much as I can, keeping in mind the bottom portions will need to be replaced due to the sill plate/foundation issues
• Replacing the fascia as I come to it with PVC Azek
• I also have some tile, toilets, chandelier/lighting, and various other components I need but have not started to use yet. Purchased from Habitat/goodwill to save costs
• Removed vines from the entire house and cut down probably 10 trees that were encroaching
• And I have a pile of scrap metal I'll deal with later

What's on deck to complete the project:

• replace the sill plate
• repair or replace the foundation
• need to buy and install several french doors
• various bottom plates will need to be replaced
• entire kitchen
• bathrooms are mostly ok and I might just leave them to "finish" the 203k, then remodel later
• remaining stucco needs to be removed
• new plywood siding, new stucco
• upgrade the electrical box and have the wires looked over in the house
• Plumbing needs to be addressed
• drywall

What's clear to me is that the contractor is either a con-artist or completely incompetent (leaning towards latter). He always mentions all of his other jobs like mine is an afterthought despite this being a massive project, he gravely misstated the scope of. I also am deeply concerned about him tackling the foundation since when he says "he will have a guy look at it," I read that to mean this will be really amateur work and in no way will it be done correctly. This is unacceptable. 

The two main hurdles have been the sewer system project and the new one is the foundation since I can't really finish the siding/framing until that is squared away. I have a foundation expert looking at it this Saturday and I will find a way to pay if that's the road I have to take. 

Since this is a 203k, the GC should be fronting the money for all of this, which he has been for smaller scale stuff. They he files for a draw periodically as milestones are reached. But, I think that for the bigger more expensive projects he is not able to do so, hence the slow progress of the work and his fixation on other projects. He even mentioned talking to the lender so they could issue the money to pay for the job instead of him, which as far as I can tell isn't kosher. So far, we have completed only one draw for about 10-15k for the work he did to date.

I'd like to fire him but I am concerned that he so severely underbid for this project that no one else is going to be able to get it done. I've been filling this gap by doing the work myself, which works for some things but frankly I am not going to fix the foundation myself, I will leave that to the pros. 

I want to do the work too, just not all of it: nothing you need training for or professional equipment, which IMO rules out me doing any plumbing, electrical, foundation. I'm basically a novice carpenter. I am finally accepting that this is way beyond where things should be and decided to tell my story and seek advice. Every time I have complained to the lender, the 203k consultant, or the contractor things seem to move briefly but then it dies again and we are back to nothing happening.

Some questions:

• Is there a legal case against the GC or consultant, is that worth it? What are the pros and cons and if the pros outweigh, when to bring any action (now, after project completion, etc)
• Am I at risk of losing the property since its not going to be done any time soon and as I understand 203k's, they should be done within a certain timeframe....now by my estimation. Is there a time limit at which point the bank takes some kind of action?
• I have been on time with mortgage payments, which because they are on the full value of the loan, I'm paying for an expensive house
• Is there a risk that much of the work has not been done by a licensed professional contractor but by me instead?
• What are the other risks?