Contractor Quote Dispute & How I am Handling It

[Chris Seveney]

So I have a 4 unit that is under agreement to sell and the inspection report came back with some electrical issues that needed to be addressed. Electrical contractor quotes me $5k but noted he could do it on T&M at a reduced rate. I let them know, yes proceed on T&M not to exceed the original number and do not do any work above that number.

Week later contractor finds an issue and says "hey, we have another issue and we can take care of it for $500, As it stands I believe I am going to come in under my estimated total." - So we authorize the work.

Contractor submits the quote yesterday for $8k and is threatening me about it. 

We see this often. Here is how I handled it:

1. I let them know (in writing) that was not per our agreement and I am disputing the amount. (note they come back and reduced $1k off of it and threatened me again).

2. I take the invoice and I pay them the amount of the original quote. This is sometimes where people make a mistake, if you owe someone money I pay them what I believe they are owed. It is in spirit of settlement but also I agreed up to a price - so I paid that price. 

This leaves a smaller balance disputed but if you do not pay them anything until its resolved, it could lead to issues if it goes to court.

3. I am staying steadfast on my response and not backing down (I spent 25 years as a GC/developer fighting with contractors) and have seen this thousands of times. 

How would have you handled it?

[Jay Hinrichs]

Quote from @Bruce Woodruff:

I would have handled it pretty much exactly as you did, Chris. As a custom builder for decades, I dealt with this way more than once, especially with new subs that had not worked for me before.

Back in the old days we used to just go with a verbal ok, but in the last 20 years or so, it is imperative to have a written CO (even an email sent from the jobsite) from the Sub and then I would add 20-25% and submit a CO of my own to the customer. In this case you are the customer so it's even easier.

Knowing you, I'm sure that you got everything above in writing, so you will be fine. They have nothing to stand on at all. Maybe if you really like these guys and their work...and feel that they honestly got in over their heads, you could throw them an extra $500 just to appear 'nice'. But I'm confused/curious as to why this Electrical Contr is so willing to burn bridges over couple of grand, is he just stupid? Or maybe really new/young?

In Oregon these days if you do not get change orders in writing they are not enforceable and the CCB will go after the sub hard.. ITs a fine line though some of these guys will lien the property even if they are not right and it buggers your title until it gets resolved.. And of course they have no money so going after them is like going after a dead beat tenant.. Best way to get to them at least here on Orygun is through the CCB and threats to their license.