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contractor dispute - help, thoughts?!
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Posted by waterbury41 (My Page) on Mon, Jun 29, 09 at 14:17
| We just completed a remodel of our house. On the final invoice, our contractor tacked on $36,000 in "extras" (for a $270,000 job). Many, if not most, of the items were: 1) not discussed at all before the final invoice (such as new gutters put on the existing house); 2) discussed generally, but we were never told they would cost us more or what those costs were (crown molding that builder installed on his own); or 3)overruns (hardwood floors were more than my builder estimated). My husband and I acknowledge that we benefitted from the things on the extras list and therefore have agreed to pay for the majority of them. But is it fair to ask us to pay for them without having gotten our verbal or written approval in advance? Builder is saying that he went out of his way to give us a great finished product and that it's B.S. that we are reluctant to pay for everything. But we hadn't counted on going so far over budget, and I honestly don't know if the amounts he's charging us are fair. I'd really appreciate your opinions. |
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RE: contractor dispute - help, thoughts?!
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| What does the contract say? That is a lot of add's/change orders, about 15%, right? |
RE: contractor dispute - help, thoughts?!
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| The first and second categories seem the most justifiable for you to dispute. As Sevenecho asked, what does your contract say about change orders, or any deviations from the plans and/or contract scope of work? Ours specify that any c/o's need to be submitted in writing and we give verbal or written approval PLUS pay 50% down as acceptance of the c/o. If we haven't cut the check for the half payment, the contractor does not proceed with the work. If you have something like this in your contract, anything not discussed at all, or discussed generally but not approved, would not be your responsibility. It is presumptuous at best and extortion at worst for the builder to add in 'extras' that you might like and then try to force you to pay for them. As for the overruns, was your guy keeping you in the loop when a budgeted number was exceeded? Again, I'd fight overruns if they were a total surprise. If he was telling you as you were going along, "you know, that marble is $5/square foot more than we'd budgeted for tile", fair enough. Good luck. About the only thing we've had control over on our project is the budget and we've battled everyone on unnecessary c/o's or proposals for them that look way out of line. Those little changes can add up, as you've seen! |
RE: contractor dispute - help, thoughts?!
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| Again a lot depends upon what your contract says (hopefully you have one). Also, some states have laws that govern home improvement contracts and some of these situations might be covered by those laws. While you did get the benefit of some of these things, that doesn't give the contractor the right to just do them and then charge for it. With regard to something like the hardwood floors it depends upon whether or not he gave you a fixed price fo the floors or whether the cost of the floors was just an allowance (which is the same as an estimate). If he gave you a fixed price up front and the material and labor ultimately cost him more, that's the risk he took and he would have included contingency in his bid to take care of things like this. From what you say, this is not a reputable way for him to do business - if you bought a big flat screen tv and the store delivered it with a sound system that you didn't buy, and then demanded payment for it, do you think you would have to pay? NO. |
RE: contractor dispute - help, thoughts?!
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Thanks so much for your responses--very helpful. The contract states: "Any alteration or deviation from above specifications involving extra costs will be executed only upon written orders, and will become an extra charge over and above the estimate." Seems like that language is in our favor, right?
We approved none of the extras in writing, although we acknowledge approving/asking for some things verbally (which we have agreed to pay for). But it seems as if asking us in the final invoice to pay for items like windows in the basement that he installed on his own and crown molding that he installed on his own and never mentioned there would be an extra charge for is a bit unreasonable. On the floors, the contract simply lists them as one of the included items in the overall price. There isn't a separate cost for floors or an allowance. He admits in final invoice that he underestimated the flooring costs, but asks us to pay $5,800 to cover that overrun. Unfortunately, he started sending us bullying emails about our sense of "entitlement," etc. We decided to offer him 80% of the total extra charges. We'll see if he decides to take legal action (which he's threatened). |
RE: contractor dispute - help, thoughts?!
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| The contract language is in your favor. The fact that you approved change orders without following the language of the contract (by not committing the change to paper) could weaken your position. If you had written change orders for the things you approved and none for the things he did on his own, you'd be in the driver's seat big time. The fact that your contractor can't bid a job and then tried to pass on his overages to you shows he's no businessman. |
RE: contractor dispute - help, thoughts?!
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| Agree with mongoct. The fact that you didn't follow the contract and orally asked for some of the changes weakens your position somewhat. However, you still have a good argument, and as I mentioned before, many states have laws specifically govenring home improvement contract sthat may strengthen your position - you should check that out. He is totally out of the water on the floor overrun - do not pay him the extra money unless you specifically upgraded what he bid on - its his problem. Your offer of 80% is more than fair - stick to your guns and don't worry if he files a mechanics lien, unless you are refinancing or sellin soon, its not a big deal. Contractors use that to scare people since it cost them nothing to file one. |
RE: contractor dispute - help, thoughts?!
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| If you learned one lesson out of this, you learned to get things in writing ALWAYS. I hope you're translating that lesson to your 80% offer and that it is in writing and that your contractor must agree to forgo any liens and accept that the 80% is all of the compensation he is due for the project. You want to have that signed lien waiver in a file with that letter, and make sure that any subs who were on the job have signed lien wavers as well. Your GC is responsible for paying them, but if he's having issues in proper business accounting practices, then he may not have paid them and they DO have recourse against you unless you have their signed lien waivers as well! |
RE: contractor dispute - help, thoughts?!
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| He should have been a better businessman, and you should have been more questioning when things got installed that were beyond the original scope. This is a tough one. He doesn't sound like he's trying to scam you, but it was certainly a big surprise, I can understand, at the end of the project. I can't counsel you to look for a legal out because you have not been exactly blameless here yourselves. My suggestion is to see if he will agree to try mediation. This is a process where two parties with differences sit down without lawyers and have the help of a certified mediator to reach a resolution that is mutually agreeable. It is non-binding (the mediator only facilitates the two parties reaching agreement, and you can walk away if you are unable to agree). It is a process that usually takes only a couple of hours, and can be inexpensive. I used to do this for a non-profit mediation agency, and we charged a flat fee of $25. The process was used for things as diverse as visitation schedules for divorced parents with kids, small claims court matters, landlord-tenant disputes, contract disputes, etc. It resulted in an agreement about 80% of the time, and both parties generally walked away positive because it was something mutually agreed to, rather than adjudicated or imposed. If you would like to try this rather than get in a nasty argument, you should be able to find a mediation agency in your area: consult the Yellow pages, your local municipal court, or do a Google search for mediation or alternative dispute resolution in your area. There are professional mediators who will charge a fair amount, but you should be able to find a non-profit that is much cheaper and just as good. Below is a link that explains this more. |
Here is a link that might be useful: Mediation
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