Issues with General Contractor
My husband & I hired a GC to build a house on a lot we purchased. The contract was for $175K. We are new to this and both parties signed the contract for this amt. I am just realizing that there was no due date, however verbally they agreed to Sept 2008 and it's Feb & they are not done. Also they have come back to us for more $$. We agreed with the verbal promise that the agreed upon addt'l amt was the final increase as they said they had their final #'s. Now they want more $$ due to items on the county approved plans that they didn't reveiw until now, even though they have had them over 6-8 months. OUr contract didn't specifically discuss materials, we discussed them verbally and lateron they provided us a materials list for the appraisal. But now they want more $$ for materials list on the materials list they provided saying that though it is on the list they weren't planning on putting that quality in our home really. However they did and now want to make us pay for the materials they originally promissed us and put on this list. We refused! Our bank is threatening default. What should we do? There is 1 draw left and they aren't returning calls or working on a consistent basis. Can they use us?
2 Answers from Attorneys
Re: Issues with General Contractor
You probably realize now that you made a big mistake in signing something you didn't understand without having it reviewed by a knowledgeable contracts attorney. That said, there should have been contract drawings and specifications on which the original contract was based. Unless during the project problems were encountered that the contractor couldn't have been expected to anticipate at the time you signed the contract, or unless you decided to add on to or change the project during construction, the contractor should not be entitled to additional money. It sounds like your "contract" lacked real specification as to what work was to be done and the nature and quality of the materials to be provided.
I suggest you withhold any further draws and see if you can get another contractor to come in and finish the job. This won't be easy, as contractors don't like to finish a job someone else started, but in this economy you can hopefully find someone. Make sure you have them thoroughly checked out before hiring them. Be prepared for them to find faulty workmanship by the first contractor that may need remedial work.
It may end up costing you more, which would entitle you to sue the first contactor for your excess costs, although collecting would be difficult unless you required them to post a bond, which obviously didn't.
Another avenue of assistance if they were licensed in MD is to contact the Maryland Home Improvement Commission and request an investigation. Good luck,
Re: Issues with General Contractor
A well-drafted contract would have addressed most of these issues, including remedies. You now have some tough choices to make. If you think there's a good chance that you can work with these people, some faith that they will finish the job,you have both an idea and the money to reasonably complete the job and get the job done, then you'll want to hold their feet to the fire with the items covered by the contract, draft addendums to cover ommissions, and have penalties for failures of performance.
If, on the other hand, you don't think that a revised agreement will complete the job, you'll likely have to sue the first contractor, engage a second contractor and finish the job.
You'll clearly also want to work with your lender, to the extent that they're willing to extend credit and patience. If they're not willing to help get this thing done, then you'll have to search for alternative financing.