Fired contractor and need advice

[Danny Lee]

Hello, we had hired a contractor back in September to gut and renovate our 3 bathrooms and kitchen, as well as apply 600 sq ft of flooring. The contract stated timeline is an estimated 8-10 weeks. As of January, we barely hit the punch list portion of the first bathroom. We paid probably about close to 50% of the entire project (our mistake to learn from).

Other than being slow and not hitting any timelines, there was a period of about a month when the contractor just did not show up. After January, he showed up to work on our property for about a grand total of 4 hours after 2 weeks.

I had a lawyer draft up a letter to terminate the contract, which was successful. However, we were sent a final invoice of $2000, where cabinets were marked as $18k (these are cabinets from cabinets.com, not customized or anything special) and there was an increase in the cost of finishing the bathroom. This obviously is a final push for a cash grab, as we had paid 50% and did not receive 50% of work. I was going to chalk this up as an expensive learning experience, but annoyed that he wants more money after terminating the contract. Furthermore, my wife never signed the contract, so I am unsure of how much can be enforced here.

With the $2000 invoice, the contractor is now threatening filing a Notice of Unpaid with our county clerk, and likely will file a lien. I am working with a lawyer, but wanted to know my options on fighting this as well. We are based in NJ, so wanted to know how much leverage we have in this case (and how much we can leverage the Consumer Fraud Act in this case). Is this worth fighting or is this an expensive lesson?

Any advice is appreciated!

[Daniel Gonzalez]

@Danny Lee Sorry to hear about your run-in with that crook. Let them put the lien on you, there isn't a signed contract so you should be fine. If you have any emails or texts then you may be stuck there. I've had a few situations in NYC where liens were placed due to non-payment and the contractors ended up paying an arm and a leg in court fees and legal fees so in the end sometimes it isn't worth it. 

@Natalie Schanne mentioned some great points. I personally like to include those incentives and penalties. Usually, in a construction contract, they are referred to as liquidated damages (LDs). You can charge the contractor LDs for things such as days past contractual substantial completion or missing milestones which could lead to a delay. This could protect you to some degree. 

I wouldn't put a lien for 2k. That contractor might spend just the same for a lawyer. I'm not a lawyer and this isn't legal advice so talk to your lawyer until you feel comfortable with your decision. I would communicate and share with your lawyer every bit of correspondence you had with the contractor. This is an expensive lesson, but I doubt you'll make the same mistake twice. 

As a contractor, I tend to cringe when I hear horror stories. Next time keep an eye out for punctuality, communication, and honesty. If a contractor is late, fails to communicate why they are late, and then makes a terrible excuse for being late you can already imagine how the job will go. Always ask for referrals and to see the jobs or visit a job in progress. 

Good luck getting this resolved.