All Forum Posts by: Senta J.

@Account Closed I think it's ridiculous. I don't know what the number of properties I own has to do with being taken advantage of by someone who is licensed and pays into the fund. I don't understand the reason for it. 

It sounds like the properties have to be in your own name, though, right? If they're under a LLC, does it still count?

@Account Closed Thank you for the information. He does have an active MHIC license, I checked on that before hiring him although I didn't check to see if he had any complaints against him with the MHIC, which I should've done.  He doesn't have any complaints against him on any website I can find, though, and no pending or past court cases, which tells me this may be a new behavior for him.

I also checked on the Guaranty Fund and, you're right, I'm not eligible because I have more than 3 properties. 

I sent the MHIC a general email asking for guidance in my situation and am awaiting a response. I didn't give his license number yet because I am waiting on my attorney to give me his thoughts. 

You're also right about the required clauses in the contract - he doesn't have those either. Another thing I didn't know about.

Apparently no one is really is really around during the holidays so I'll probably know more next week.

Thanks again to everyone who responded. It sounds like I don't have a whole lot of options at this point other than to cut loses and keep moving forward. Lessons learned for next time. 

I'll update the discussion if anything that could be useful to others comes of this. 

@Ian Barnes Thanks for the advice. We would've liked to JV with someone starting out but the person we were going to partner with was moving in a different direction than we were looking to go so we took a chance at doing it ourselves. Do you have any suggestions on how to find the right person to JV with on future projects?

Also, I'm not an attorney but I did spend 4 years working for the Judiciary. Using deception to get money is a crime and contractors have gone to prison for doing so. While there can also be civil suits brought based on the contract, that's not the only option. Generally when a person has been found guilty of using deception to get money, the judge will order restitution be paid to the victims for the amount they were defrauded as well as a prison term, depending on the amount stolen. If we took this route, it wouldn't cost us much because the state would prosecute him. I would prefer not to do it this way because I wanted to give him the opportunity to make this right & it would take years to play out. 

He's been in business for 8 years, a search of court records shows he's never been sued, never had criminal charges against him and has a clean history. I don't see how a person just wakes up one day and starts stealing from his clients.  

Thanks to all for the good advice. This rehab is being done in Baltimore, MD and he is licensed and insured.

No, we did not have lien waivers. We didn't know about them until we already started having problems with him. We've had pretty good experiences with contractors on smaller projects on our personal residence until now and didn't really know how bad it could get.

We have a contract that pays by the job item (it was his contract). So, we put down a deposit of 15%, then another 15% after the demo was done. That was supposed to be his working capital fund. Then, we just paid for each component thereafter but some components are not quiet done because he would give us assurances they'll be done soon. We have all the proper permits and passed all the rough-in inspections - I pulled the reports from the city government.

In the last few hours since I posted the original post, I found out one of the subs called my husband and said they're owed over $3k and they will be placing a mechanic's lien on the property. 

At this point I'm considering filing felony theft charges against him along with the civil suit and complaint to the Home Improvement Commission. I was thinking of giving him a week to rectify the situation and then letting him know I will press criminal charges. 

Any thoughts on that course of action?

Thanks again,

Senta

Hi All,

I am hoping I can get some advice regarding my situation with the general contractor I hired.

My husband and I are doing our first flip and we took 3 months vetting general contractors to make sure we end up with the right one. We spoke to 13 contractors and finally found one who seemed to be perfect. He came highly recommended by a very experienced flipper at our REIA, is licensed and insured, very experienced and professional. I looked up as much as I could online and found nothing negative about him. Unfortunately, something happened along the way and we don't know what to do.

We are currently a month over schedule, he says he'll do x,y and z in a given week and it doesn't get done. Then, he doesn't respond to phone calls and texts until days later. He always has some excuse: phone isn't working, family emergency, etc. Then, when he does work he'll say such & such item will be done tomorrow and wants payment. In the beginning, since things were good and he started out strong, we paid him a day or two before that work item was done. Now, however, there are several things he's been fully paid for but are only partially done. Recently we found out from one of the subs that he hasn't gotten paid for the work we paid the GC for. I don't know what the payment status is for the other subs he used. 

The investor who recommended him called recently and told us this contractor didn't pay his electrician for her job and the electrician put a lien on the house so she had to pay twice to be able to sell it. When she confronted him and withheld payment for the next work item until he pays the electrician, he walked off her job. She said he told her he would pay her back but hasn't done so yet and it has been a few weeks. 

I'm not sure what to do here. We made a lot of mistakes since this is our first flip and we trusted him. Our contract with him does not have a termination clause so I don't know if that means we're stuck with him. I have a call in to our attorney but I'm hoping the BiggerPockets community may have some ideas on how to deal with this.

Thanks in advance for any suggestions you can offer. 

Senta

Thanks again, Dion. It looks like the home went into default in July, 2014 and was placed at auction in January, 2015. My realtor said they tried selling it first but it didn't move so maybe the auction was the last resort. 

I did as you suggested and contacted the title company. They said they spoke to the county this morning and they are waiting for them to record it any day now and then they can schedule the closing. They also said the title is clean and they will issue an insurance policy. So, big relief to hear that! 

Thanks to everyone who provided input, it has been a great learning experience! I will definitely do better next time on the front end of the deal. 

Thank you for your detailed post, Dion. I tried to attach a screenshot of the title search but it didn't work. The open mortgage is with a company called Dell Franklin Financial, LLC, which was the original mortgage holder when the property was purchased in 2005. Then, it was assigned to Wells Fargo in 2012. Wells Fargo is the seller on the contract. So, I'm not sure why the mortgage would be open for the original lender.

The title company handling the closing said the title recordation is being held up by the county. They said they don't know yet if it was rejected or if's it's just slow. The title report does not show any outstanding taxes, would there be any other reason for the county to reject recording it? 

Is there any reason for me to be suspicious that this is not the reason the closing was delayed? If they know this would be a very bad deal for me, perhaps they wouldn't tell me the real reason so I don't try to walk away?

If there were junior mortgages, would they show up in the title report? I didn't see any indication that there were any other mortgages with that owner but if the property was foreclosed due to a junior mortgage not being paid, could it have already dropped off the report and, like you said, this mortgage is still open?

If there are some of these out there, hopefully the amount won't be too high since there seems to be very little I can do about it now. I don't know how it works but since the property has been vacant for over a year, I would hope that if there was something out there, it would've shown up on the title by now.

Thanks again for all your help. It was a great learning experience and will help me to do better next time!

This is all extremely helpful! Since the mortgage is no longer valid due to the foreclosure, they'll have to remove it from the title, right?

So, if there are unrecorded liens, is there a way for me to find out what they are? 

Also, is there a period of time after which a lien can no longer be recorded? Sort of like a statute of limitations for liens? Say, for example, a lien is placed after I close, would the title insurance cover that (assuming I can get one)?