Contractor does a poor job and has to be replaced; how do you fire contractor 1 without him filing a lien?

Question

Almost finished with a rehab project. Contract was overdue almost 2 months. Part of the job was some major excavating in the rear yard which involved removing a collapsed pool and patio, regrading the yard and seeding. It was known that the yard had drainage issues. The excavator the contractor hired did not address the drainage issue (presumably by order of GC) and also did such a horrible job that the yard can't be mowed from ruts, rocks and bumps. The drainage issue still remains. The job was not done properly. I'm getting bids from other excavators and narratives about how poorly the job was done. Contractor 1 is about 65% paid. I want to subtract the amount for what it would take to get the job done properly and pay him the difference. Can he file a lien demanding full payment if the job was done so poorly that the yard is not usable?

Brandon Smith · Answer

My contractor's work on draws so they always have some skin in the game. I've had to fire a number of GC’s do to similar situations but I've always been cleared because they don't get their last check until they sign one page lien waiver doc. It prevents them from putting a lien on the home assuming they've agreed to take some sort of agreed upon payment. I’m in Texas so, I say here’s your check but before your check you need to sign this… Brandon.

J Scott · Answer

Agreed with both Karen and Wayne... First, what does you contract say about going over schedule 2 months? If there is a penalty, that can be used as negotiating leverage to help get the rest of the issues resolved. If the penalty is that you can take the job away, then you have that option as well. Assuming the contract isn't explicit about how to handle this situation, I'd sit down with the GC and give him an opportunity to resolve the situation at his own expense. If he refuses, then you can bring in another sub and cut your GC loose. Regardless, make sure you document everything very well...if there is a lien and a lawsuit, you want to be able to support your claims.

Zechariah Evans · Answer

Sharon, Speaking from the perspective of a GC I would agree with j Scott. Personally, my company structures its contracts differently using draw payment systems. For example, up front we usually charge a signing/permit fee (depending on price of project around $150-$450) earnest money to prepare and pay for any documents and permit. After providing you with permit an necessary documents we then ask for draws at pivotal points (every project varies, but normally 2) first being Pass of rough inspection, but the second we break up to a per trade basis. At this point we walk through with the owner, each specific trade and if you we agree jobs are done properly we both initial and sign and request a draw. So other than agreeing with Jason the best thing i think to do is before signing a contract find a contractor who is willing to spend a few hours talking to you about how they structure contracts, how they manage their subs, how often will they be onsite. Basically just get to know them , if your giving them anything of any monetary value and trusting them to work for you getting to know them is a very necessary part. Were primarily are a Carpentry General Contractor so we do 60-70% contract work in house and the other 40-30% we schedule when we are there working so that we can proactively brainstorm and solve problems as they arise. Hope that i could have been more helpful. Zech @Sharon Klein

Bryan Davis · Answer

I went through a similar situation with my home. GC never was on site. Crew left my home in shambles and THEN GC wanted more money! I told him where he could go, he threatened liens then resorted to claiming that God would deal with me. That's about as far as it went. Document EVERYTHING. Take pictures, record conversations or at least take notes, whatever you can do to prove yourself to be in the right. When a shady GC sees that you've got your bases covered, they tend to stand down.

Sharon Klein · Answer

Thanks everyone for the input. I'm new to Bigger Pockets and I'm already thrilled to be on board! My contract says I can cancel the job if contract is violated. He was put on notice about being late shortly after he was. He had numerous opportunities to make things right and I have a long email trail of discussions about dealing with the drainage issue before the excavator got started. He did not properly bid the job and the excavator he hired did what he was told to do by the GC and drainage issue was not in HIS contract. (he was contracted to remove a collapsed pool, grade yard after removal and leave). Before his excavator showed up (excavator was also 2 weeks late), I brought my own excavator in to bid, but GC ended up going with his guy. As I was in contract with the GC I had no choice at that point. His guy did a crappy job. I don't think my GC has a leg to stand on as he went against my wishes to hire my own excavator who was going to deal with the drainage specifically in his excavation contract. My plan was to immediately put the house on the market but because of the back yard I can't, so I rented with option instead. (I always have a plan B and C). Now I have more time to deal with the issue as I need to. He also did a crappy job on the driveway and walkways and I need to redo those as well. Question is, what sort of recourse does anyone have when a contract does the job, but does it so poorly it has to be redone by someone else? Jobs are presumably supposed to be done in a "workman like manner". Contractor hardly supervised his crew and rarely showed up on site except when I nagged and nagged him to get there.

Karen Margrave · Answer

Every state has their own lien laws, etc., check yours. I would sit down with the contractor and try to come up with a compromise. He settles out for what he's been paid, and you don't file a complaint against his license. (Did you check his license, bond, insurance, and references before you hired him?)

Wayne Brooks · Answer

A contractor can file a lien, whether he is right or wrong....just like suing somebody. Either the GC, or the excavating sub can file a lien. If they don't/didn't follow the lien law requirements you could get it quashed on it's merits. Are you having to fire the GC, or can you get the GC to handle it by getting a different exc. contractor? Some of the possibilities will hinge on exactly what your contract with the GC says. Have you simply met with both of them at the site to look at it, and come to some reasonable solution? Did your contract specifically include any work to "address the drainage issue"?