Taking Over Another Contractor's Unfinished Work

Flacan

We're bidding on 2 new construction houses, which are partially finished.
These 2 houses are owned by 2 different owners, and after the last draw from the bank, the contractor walked away. This we learned from a third party, who is friends with me, and also friends with the owners. The owners and I are not acquaintances (for what it's worth).

The slabs for both houses were poured early 2006, and the last inspections took place about 6 months ago (rough electrical, plumbing, a/c, etc - some passed, some didn't pass).

There are some issues with some of the work, and it's possible that due to the contractor bypassing a roofing inspection, that the roof tiles may have to come off. We don't know yet, because we haven't met up with the building inspector yet. There are other things as well, but we feel confident about much of it (we've also gotten a second opinion from another GC friend)

We're working this with a few very experienced subs (we've worked with the electrician, plumber, a/c contractor, roofer for over 10 years) and we'll have a good idea about what we need to quote in order to finish the job, after we meet with the inspector(s).

My concern is that because some of the prior subs may be putting liens on the houses, that the owners may be in a difficult financial situation - owners may need to pay subs, we'll probably need more to finish the work than what was left to pay the original contractor, financing issues (houses may not appraise for what they appraised for in late 2005, because prices have come down in that neighborhood).

My question is: what is the best way to ensure that we get paid if we get the job(s)? What are some typical ways to get paid in such a situation?

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Raimo Kumpulainen
Those who don't remember the past, are condemned to repeat it.

rex

well they left for a reason.... either get money up front or dont take the job.when ever im approched to take over a partialy finished job my first question is were did the previous plumber go.....always some kind of excuse...

with out sounding like a jerk i say well in order for me to finish this job im going to need X amount to start plus money for the new permit....all fixtures and materials need to be paid for up front and before inspection i need to be paid in full....if they have a problem with it walk....id rather waste 1 hour goin through the job than to have to fight to get my money

joasis

A well written contract, and look at the local courthouse for filed liens....would be a start....but basically, what you will be taking on should be detailed thoroughly in contract form, will all parties in agreement, and even if a lien check comes up clear, make it part of the contract that the owners are responsible for any work, materials, labor, strikes, acts of God, before you drive a nail, and you are only doing the scope of work detailed in your contract....plus a provision for change orders....

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KillerToiletSpider

As a sub, the only way I would touch that would be T&M, there is no way of knowing what the original plumber didn't do right.

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Chris Johnson

If the house you are talking about is in Ontario (As per your Info to the left) the lien period expires in 45 days. I don't know Florida law at all, someone else please. If it is Ontario after 45 days they must sue the owner or other contractor depending on who the contract was with, so I would say you are safe in that respect.

I would consider a T&M price to complete what has been started (Plumbing, Electrical, HVAC, etc.) and once through that portion of checking and confirming enter into a formal contract to complete.

I usually ask for a proof of financing before I start, even if it is a letter of pre-qualification for a mortgage, I am satisfied with that.

Have a lawyer review your contract on this one, make sure the i's are dotted and t's crossed.

Also pull in a engineer to review the work to date or at the very least the local building official, find out what they are looking for ahead of time. Pulling off a finished roof doesn't sound like much fun at all.

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Chris

wackman

Is it the same builder who was building both homes?

I know of several projects that got stopped because the builder was in over his head financially when the market started going bad and they went under, thus stopping work on all projects even though things may well have been done right up to that point.

I'd find out why work stopped, it might not be the customers or the banks fault at all.

dirt diggler

i agree with wack - sounds like a couple builders went flat belly up in the middle of a couple projects

Driftwood

Only an inexperienced Cont. would give this a second look!

Flacan

I'm in Florida - a native, after 27 years.

Thanks very much for the quick input. It's 2 houses for 2 separate owners, and one (1) contractor - walked away from both jobs at the same time.

Both home-owners appear to be inexperienced investors, as the prior contract, plans, fixture schedules, etc, are very vague in details.

We are approaching this very carefully.

If anyone has more to add, please do. Any and all information and/or opinions will be very much appreciated.

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Raimo Kumpulainen
Those who don't remember the past, are condemned to repeat it.

Teetorbilt

I'd approach it as a new contractor. I'd contact the BI that failed the inspections and do a walk-through with him, then write up the contract. You'll have a much more clear view of the previous workmanship and a fair idea of what you are up against. Write up the new contract accordingly. You'll also get in good with the BI (never a bad deal).

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L. B. Condulet

I agree 100% with KillerToiletSpi, T&M and I offer no warranty. I have always had a policy that I don't clean up other people's messes, but if it's not too too idiotic, I would do this job.

c.c.co.

We just finished a couple of houses that the old builder did not call any inspections and screwed up many items. I wrote a cost plus contract and stated that the transfer paperwork and registration required by Texas was the responsibility of the developer and that we nor any of our subs could warranty any of the existing work. It was a lot of work to get the engineers and inspectors to sign off but in the long run everyone was happy. The developer probably broke even but atleast he moved the houses. We required payment weekly so as not to get burned.

Flacan

Thanks for the input - it all helps.

Did a walk-thru with the BI on both houses. One of the HOs was present, which is a good thing.

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Raimo Kumpulainen
Those who don't remember the past, are condemned to repeat it.

floorinstall

my understanding of the lien law in Florida is that for any contract over 2500.00 you have to notify the owner with a letter of commencement of work prior to starting and the lien window is 90 days after completion. I have never had to apply for a lien yet but researched the process before opening my business in Florida. You can get all the info a sunbiz.org. hope this helps

CertifiedFunds

In florida it is called a Notice to Owner and if the owner is involved in meeting you then a nto is not needed he is considered privvy. Any way you have 45days from first day on job to get them served. Then 90 days after last day on job to file lien. But be careful the new laws have changed the wording on the liens.If you file a lien don't wait have a lawyer place the home in foreclosure ASAP you only have one year to do so. I have filed hundreds of these and they will get you paid if you are perfected on your NTO, Lien, and foreclosure.

Stone Mountain

If you are worried about the money, have the owners place money in trust with a lawyer, with specific draws at specific stages of the work. That way, you know the money is there, and you can put in mutual conditions such as each stage to be inspected and passed before payment, either by a town inspector, or an independent technologist, engineeer, or some such.
When each stage is passed, the lawyer repeases a cheque, and you continue.
If they are working from a bank loan, the bank can do the same thing. If they are working from a personal line of credit, they'll have to withdraw the money and give it to the lawyer, so they'll pay some interest. Otherwise, I wouldn't do it.

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Flacan

Thanks, I only got to read the last 2 posts today.

We have found so many problems (and some of our subs are very hesitant at the moment), that we may pass on this one. The subs are hesitant because of the inferior work (who knows what else will turn up).

I'll let you all know how it turns out.

Thanks a bunch!

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Raimo Kumpulainen
Those who don't remember the past, are condemned to repeat it.

kevjob

most likely you will encounter things that to be completely redone.

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Kevin
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