All Forum Posts by: Bill Quigley

I hope someone else has better information or help but unfortunately I agree with your assessment. After my 1st flip last year, in central Illinois, the GC filed a lien for non authorized Changes and other charges. I had a bad attorney and he did not fight for us. 

Even though the Contract stated written Change Requests are required, he was able to put a lien on the house. I tried to fight it but time was on his side due to slow movement in the Courts and I had to settle after 5 months so I can get escrow held money back. 

What I learned is that a Contractor can place a lien anytime they want without just cause.  We need legislation help to protect us and the consumers. 

I've gotten out of Contracts before due to Inspections.  If they do not do the work you request, then you can get out.  One tried to give me bogus invoices to say the work was done, but it was not, so we got out of it.

I got tired of having my Contractors sign a new Lien Waiver paper every time, so I create a Lien Waiver document to allow for multiple draws.  It has the Lien Waiver verbiage at top where the Contractor signs.  It also states that the Contractor will have to initialize for each draw.  I then have multiple lines for each Draw that shows the Date, Amount, Invoice # and a place for them to Initial.  My attorney looked at it and said it will work.  If that page fills out, like it has for me, I print out another page and have the Contractor go through the whole thing again for the newer Draws.

@Coral Hernandez has some very good points.  From personal experience of being in my first Lender financing, this is what I've found;

1- Lots of paperwork to provide during your first Loan request which takes time to complete

2- You do NOT get any money up front

3- If you are buying materials, to cut your costs like I'm doing, you will need to have a means to buy them first before that money is reimbursed to you from the Lender

4- There are fees for making Draws on your Loan, so you will need to calculate those fees into your loan expenses and possibly limit the number of Draws.

5- Contractors may not get paid for an extended period of time since they will have to provide an Invoice of completed jobs which are submitted to get the Draw.  If they take 2 weeks to complete tasks it can be another week to get the Draw.  Then you have to balance how often you want to make the Draw since you have fees associated with them.

6- You will more than likely need to provide financing in the beginning to purchase your property since Lenders do not pay 100% of the Purchase cost.

7- I had to sign an ungodly amount of paperwork on my first Lender loan.  About 2.5 inches thick.  

I will evaluate the final costs once I complete and sell the property.

I’ve found out the hard way that it’s very easy for a contractor to put a lien on a house, even when they are at fault. So I’d suggest to get with a “good” real estate attorney to see how best to proceed. I’d hate to see him putting a lien on the house. 

After our first flip (in Central Illinois), the contractor submitted an exorbitant bill and then a Mechanics Lien. I went the legal route and hired an Attorney. Now on Aug 1st my attorney submitted a Motion to Dismiss that was accepted by the judge with the following stipulation.

"Plaintiff is granted 30 days leave to file amended complaint to add as additional Defendants the current owner and mortgage holder of the subject premises and to add additional factual allegation in response to Defendants’ MTD. Defendants to answer or otherwise plead within 21 days thereafter."

I was able to sell the house but 2  times the Lien amount is held in escrow till this is resolved.  Now according to the above order by the judge, the 30 days have past and no amended complaint was submitted.  So it is my belief that my attorney should submit to the judge the final order to Dismiss.  But he's trying to tell me I still have to wait because they could still submit an amendment even though the 30 days are past.  But he cannot, or will not, tell me how long we have to wait.  

Does this sound right to you?  That an Amendment can still be submitted.  And that I have to wait till who knows when?

Thanks for any isnsight.  Bill

In my last flip I had a buyer request a lot of changes too. But like @Mike Dymski stated we only did the necessary fixes. The buyer did not push back and took the offer. We did the fixes ourselves since I felt we can do it cheaper than an acceptable credit, which helped my bottom line. 

What about Wholesaling some of the deals?

I am finishing my first rehab and the thing that bit in the butt was the Contractor.  So what I am doing for my next rehab is to control the work being done.  This will be done by detailing all the work that needs to be done in each room and assigning # of hours to complete each task.  I will break each task down so that each can be done within 8 hours if possible.  Then the Lead Contractor will help me determine what tasks are needed for that week.  Sub Contractors will select a Task and work it to completion.  If there is something that stops them midstream (such as needed materials) that task will be Parked and another Task can be taken.  

At the end of the week, I will collect all Tasks that were completed and review them with the Lead Contractor to determine if it was completely done or if more work is needed.  Sub Contractors will be paid based on the Tasks completed.  If a Task was partially done, they will be paid partially for that Task and will get the remaining the next week when it is done.

The other item I will do differently is the getting of additional materials needed.  Instead of having the Contractors go to the store whenever they are in need of something, they will notify the Lead who will record it.  The Lead will then do one trip at the end of the week for all those materials.  That Task will be placed in Parking section for the following week to complete.  

This way I have better control of the Materials costs and the Labor costs.

We are flipping in Central Illinois. Our toughest challenge is finding good deals, but we are new to this and are getting ready to close our 1st flip. I see a lot of foreclosures in our area so it seems to look good to me.