Non Payment Problem Involving Insurance Job?? Very Long But Need Feedback!

kdub1777

Well, I have a nonpayment problem that is a little unusual for me, but a big problem as it is. We were contacted back in August, by a rental property owner, to do an insurance job involving a duplex that had the floor system burnt out of it. We have done our share of insurance jobs and our past policy requires a big down payment, and payments of completed work every 2 weeks until job is complete.

After looking at the project, discussing the cost with the insurance company, and getting all the usual contracts/bids etc. etc. signed and approved by all parties, we decided it would be a good job. This was mid August. The total contract price was $47,000 for what we needed to do. I asked for $20,000 upfront that the owner wrote to my company out of his business account he owns his rentals in. (The check was written after the insurance company cut a check to him for the total cost of the project)

After receiving the check I felt comfortable and we began work on the project. (While depositing the check that first day) I had my whole crew on this job to knock it out as quick as possible. So a week goes by and we are knocking this crazy job out, we have 90% of the project done, and I get a call from my bank. The check the fool wrote me bounced. What the hell???
Those should have been sufficient funds from the insurance company right??? Well they should have been but I find out this isn't your average straightforward guy.

Well I immediately pull everyone off of the job and call the owner. He states that he had the same problem with another company bouncing a big check to him causing him to be short. This still doesn't make sense to me because the funds should have been saved for this job directly from the insurance company. Well I tell him I need payed immediately and we are stopping work, etc.. He says he can get me a cashier's check and that it will not happen again, and that he got caught in a bad situation.

Well, about a month later after some threats and numerous phone calls, I received a cashier's check for $20,000. After another three weeks and talking to the owner and being reassured he would be good on the rest of the payments, I decide to go in and finish the job we had started. (I must be real gullable and also a fool)

All we had left was carpet and had already purchased the material. Please remember this was about a 9 day job with a large crew and it has now been two months before completion.

I then submitted the final bill of $27,000 to the owner along with a contract completion form with the final cost on it signed by the satisfied owner and then he tells me he needs to wait about a month before he can make the payment. This just hits me all wrong. This guy has used the specified money for something else and has been stringing me along the whole time. My invoices are net 30 so I told him because of my policies I have to allow for 30 days. (I feel like a fool now because I know I handled this whole situation and payment schedule all wrong at this moment)

Well that time has come and gone and just today when contacted, he is saying he thinks he can have my payment around January 10th after he sells another one of his duplexes, and also has an application in for a loan blah blah blah. (average b.s. talk) I also found out that he has purchased a bowling alley, which I assume is where my money went from the insurance company.

Now I am stuck in a tough situation, I talked to the insurance company and they said there is nothing they can do. The contract is between me and the owner. My attorney is out of town until after the holidays so I am waiting to hear back from him.

I know this is a long read but I needed to rant and get some feedback from all of you.

What are my options now?

I am thinking that this is not only a civil matter but a criminal matter for me to pursue. Is this correct?

What would be the best option for me to get the money out of the guy??

Definitely a learning experience for me. I will not be as lax on payment with insurance jobs from here on out.

Thanks for reading

Bodger

Why Net 30 on the invoices?

Snobnd

I would start by having the lawyer put a lean on the property, also I would hope you have a default clause on the contract for some extra fees.

By putting a clamp on the property he will have a harder time getting a loan for that bowling alley.

Keep us posted. Good luck

Chris Johnson

I don't see anything criminal, if his insurance company paid him, he can do as he pleases with the money, they have settled with him. For all you know they could have only given him 40k or may have given him 60k, you don't know, your deal is with him, his is completed with the insurance.

But, I would be liening that bad boy now...give him a nice Christmas present

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Chris

kdub1777

That is the invoice template that my accountant set up with me a long while back in Peachtree. That is what I use to invoice. I have yet to have a problem with the net 30 and all my accounts are net 30 so it has worked out so far, but that is one thing I will be changing for future invoicing.

What do you guys use? Due on delivery? Net 15? other?

buildpinnacle

I am not certain what state you are in, but there is a possibility you can file a criminal complaint against him for theft of services. Anyone can file a criminal complaint and the District Attorneys office must investigate it. I would do a bit of research on that for your particular state. The standard answer here from everyone is going to be to file a lien.

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kdub1777

My next question is, what can I lien? Only the property we worked on? Or can I lien all of his properties owned by the biz he wrote the check from? Or everything he has once owned, currently owns, or plans to own in the future?????

1mancrew

I think you can only place a mechanic's lien on the property that the work was performed on.

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www.KirbyCustomHomes.com

We Fix Houses

What state are you in ? Please fill out your profile.

You say you went back to the job site in mid August ? Filing a lien is a must in a situation like this. The time line for filing is related to the last day you supply labor or material to the job. It could be 90 - 120 days so you better get moving.

It's not rocket science to fill out the forms and take them to the court house. It does take some study however. You need to review your states mechanic's lien laws specifically. Here's a reference you can use also:

http://www.nationallienlaw.com

If you find yourself hesitating or not, call a construction atty right away. Maybe you should have done so already.

You can call your local bar association and for $30 you can talk to an atty for half an hour if you are not connected to one already. Ask the bar assoc for a referral to a construction dispute, collections type of atty.

Hope this helps.

Let me add that I've billed net 30 on occasion until I found out that that I couldn't file a lien until the invoice reached maturity. That along with the statutory time frames, I now invoice due upon receipt or net 10 days.

I've had to file a few liens on a customer in the last couple of years. a lot of work, just slow pay..90 days plus.

kdub1777

I am in CO. The lien deadline is 4 months, so I have been watching that closely. The attorney is out of town on vacation until after the Holidays, so I am patiently waiting to speak to him.

Can I put a lien on the bowling alley that he just bought? As well as the property?

Deicide1

Only the property you performed services on, as per New York State law. Your state/local laws may vary, but I doubt it.

We Fix Houses

As far as I know just the property you worked on.

A lien is not a big deal to your client. But the notice of lis pendens, foreclosure proceeding will get his attention. That's how a lien is collected. He know's all this. He'll pay on the last available day if you have your ducks in order.

kdub1777

I have never completed the whole lien process before. I have had to send out intent to lien notices and one lien and make some threats, but have always been paid before the end.

What is the time frame of a lien until foreclosure?

These are all questions I will ask the attorney when he gets back, but it is nice to get all the feedback I can.

Bodger

Mine are all due upon receipt.

We Fix Houses

It's in the link I posted earlier. It also doesn't specify perfecting a lien in CO is by foreclosure but I suppose it is. The amount you are owed, imo, you need a lawyer to represent you. There may be mandatory arbitration before trial on a law suite of this size. Be prepared to pay your side of the arbitrator fee ~ $350, same for your late pay friend and your atty's time.

What would really help out here is if you get back to this forum with what arrangements your atty wishes to make for taking your case? By the hour, 1/3 of recovery....etc?

GregS

Stop calling it an insurance job unless it's the insurance company paying you directly. It's just a job that you are doing for another HO, the insurance has nothing to do with you.

Also, get rid of the 30 days.. It's due when it's done, or according to the progress payments you set up in the contract. You should also put a few more progress payments into your schedule so that you don't get ahead of the money and into this situation.

And ya, do the lien. Hopefully it's still within the required timeframe.

Bodger

That's IT in a nutshell.

Dorman Painting

I would probably give the guy one more shot at squaring up, after that I would pursue the lien. Twenty seven grand is a whole lot of money and with this economy, he's probably cash strapped like most of us are. I'm not making excuses for the guy, but I've been in these sticky situations before and I'll generally try and let it play itself out before going and hiring an attorney.

Something I learned the hard way too, is that banks are bad about letting you know the check has actually bounced. I had a lady bounce an eight thousand dollar check and it took the bank about seven days to contact me. By the time they contacted me, we were finishing up on the job and I was already out twenty five hundred in labor and material. I never got that money back either, that was two Christmas's ago and it was a nightmare. On anything over five grand, I normally request a cashiers check now.

72chevy4x4

you can confirm funds are available for a check by calling the bank and asking if the funds are avialable. Something to the effect of "I've got check #5421 in the amount of $8000. Are funds availalbe?". That means that as of that second, money is availlable-pretty sure they would tell you if a stop payment was posted on that check number, but if other claims come in on the balance, they will be paid out. This doesn't take the place of 'certified funds' which my hold the amount in the bank account until drawn upon.

GregS

Seriously? If my bank gave that information out to someone on the phone they would be in for a privacy lawsuit.