HO Cancels Check For Final Payment

PrecisionFloors

Best advice in this post imo.

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thom

The damages he would be mitigating are his own damages. Before you start throwing your ignorance around you should read the post.

Of course he (the contractor) has damages, that's why he wants to collect. Damages are always considered in terms of $, that's what the courts want to deal with.

Without all the information, he can't get an accurate answer. His damages could include unjust enrichment of the owner at the contractors expense, or failure to deal in good faith (this is a law in many states). What he cannot do is sue for enforcement of a (verbal) contract because there is none.

Lack of a contract does not mean he can't collect, it does mean that he will have more difficulty collecting.

NOW, the real issue here though is not about suing. That will be difficult and expensive (I've been there several times). The real issue is for the contractor to MITIGATE HIS DAMAGES. The definition of mitigate includes "lessen or try to lessen the seriousness or extent of". That means, in really simple words, the contractor should attempt to reach an amicable deal with the owner. Taking a small loss off the amount of the check may be the least expensive course of action for the contractor.

bwalley

Here is an explanation of mitigate damages.

MITIGATE DAMAGES - Taking action to avoid or reduce damages.

A person who claims damages as a result of an alleged wrongful act on the part of another has a duty under the law to "mitigate" those damages; that is, to take advantage of any reasonable opportunity he may have had under the circumstances to reduce or minimize the loss or damage.

So, if a Plaintiff [within the limitations of any [COLOR=blue! important][COLOR=blue! important]disability[/COLOR][/COLOR] he may have sustained] fails to seek out or take advantage of a business or [COLOR=blue! important][COLOR=blue! important]employment [COLOR=blue! important]opportunity[/COLOR][/COLOR][/COLOR] that was reasonably available to him under all the circumstances, then the amount of damages awarded may be reduced by the amount he could have reasonably realized if he had taken advantage of such opportunity.

The contractor is the one who was damaged, one of his claims for suing the HO, is unjust enrichment, but that is not Mitigating his damages, that is trying to recover his money that is owed to him.

If someone has his windshield busted out, he would need to mitigate his damages by securing any valuables in the vehicle and protecting the vehicle from a pending rainstorm, by either moving it to a covered parking place such as a garage, or temporarily covering the broken window to keep rain from getting in.

If the contractor decides to try and work with the HO and agree's to accept less money than is owed him, he is reaching a settlement, not mitigating his damages.

Brock

Price is fair.

You just need to set up a face to face. Heres what you bring.

Take all the documents from the first job that went well. Show him the breakdown on the labor and materials, then compare it to the second job. I would bet that you had more profit in the garage (1st project). At the end of the meeting he will let the check clear. It is critical that the wife be at the meeting or this wont work. Women will fight you behind your back and threaten their husbands to carry out their illogical demands,but their weakness is hearing and then understanding the logical facts. They are dark fighters. It will shut them down like a motor with no oil in it.

BTW back in the day I operated my business under my personal name. Anytime I received a check I would go to their bank and get the cash. Sometimes 10,000 or more! When I changed to my company name it never occured to me that I would no longer be able do that. Sometimes I regret it because of the remorse factor. The buyers remorse grows like mold sometimes during the job. Imagine if you made a hasty decision to buy a new Rolls Royce and they built it in your garage and it took them 5 weeks to do it. You just want out of it as cheap as possible. Stop the bleeding. I can sense it coming on the last couple of days. Thats why I go overboard iwth communications. The main reason is that it gives me a chance to gauge their emotional state of mind.

thom

Well Bwally, I guess you really can't read. I've typed it twice, I'll type it again.

The contractor should try to mitigate his damages by working out an amicable agreement with the homeowner.

Yes the contractor has been damaged, he's out the last payment. I specifically suggested (twice) that he would be better off not suing. Never did I suggest he should sue to mitigate damages, that's in your head, not mine.

Sure "mitigate damages" is a term with legal meanings, it's also a term with real life dictionary meanings. Not everything is about spending time in a courtroom (though I've had more than my share of that). Even when winning in court, the contractor generally loses. At best he gets partial compensation for legal costs and he gets zero, zip, nada, for the hundreds of hours he puts in preparing the case and sitting in the courtroom Then there's all the antacid costs, they aren't reimbursed either.

oldfrt

Thanks for the responses,
I know that litigation is not the route to go.I consulted a layer a couple of years ago in a similar situation where the HO refused to pay for extra's that were requested by them.
I settled for half the difference between my costs and what the HO's was willing to spend.
Compromise is less costly remedy and it made good business sense.

On this mater I'm waiting for the HO to return my phone call so we can discuss the agreement we had three weeks before the job was finished.At that point he received a hard copy of the expenditures to date and an estimate for the final costs.He agreed to the final cost.
After the three weeks ,and while looking over the final material costs,I realized that I billed him for some of the garage material and lowered my final bill to account for the difference.
So the final bill was actually lower that what he was expecting.
That's what really gets me,What happened in 30 minuted since he paid me to make him change his mind.
My only guess is his wife may have an issue with the final cost,and he wasn't keeping her posted of how much he was spending.

I may have to compromise some cash.I have a number in mind because the HO kept us going with 4 months of work.

What bothers me the most how he will relate his experiences with us to other potential customers,since all my work comes from word of mouth.Even if I reduce his final bill,I feel there's no chance for damage control here and can only hope he doesn't cost me more in the future.

Thanks again guys,
I will posts any relevant updates.
John

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dubz

Good luck John.

Where are you in northwest CT? I'm out of Warren.

roof-lover

This is just a guess. But this is how it all went down.

Wife- So how much is it?
husband- 40 thousand dollars.
(first mistake, both were not together when you made the deal
and no contract for her to look at.)

Ofcourse husband forgets to mention the "up or down" part.
Heck, hes trying to forget it as every day passes.
also fails to mention to her that there will be other things they need to pay for after you are done.


Wife- 40 thousand dollars? thats a lot of money. can we afford that?
I dont know about this.
husband- i like him. he did a good job on the garage.

Then delays happen and then they both think you should be there when you were not.

husband talks to freinds. More than one tell him that they can build a whole house for 40 thousand.

Then when it comes time to pay.
He thinks that the MOST you should get is 40k.


Husband talks with wife and talk about the other trades that need to be done(and their pricing) and are pissed that it wasnt included in the 40 thousand. They have a big ol fight over it.

Then he and she realize its 42k
and its the straw that broke the camels back.

When you got that call,
You should have immediately turned around and talked to them in person.
and forget what ever plans you had in mind.
No way should you have let the sun come back up before you dealt with it. Every hour that goes by, they are more and more comfortable with their decision.


They havent returned your call. YOu need to camp out at their house and talk to them both. Dont let another single day go by. You can't settle this over the phone. Tell them how important they are to you and your company. Tell them that you need them as a good reference and that you want to make them happy. You tell them that you are not happy untill they are happy.

They are thinking right away that they only want to pay 40k period.
Thats whats up.

Just my theory.

Dorman Painting

I've been down this road before too, I did a verbal job and lost eight grand. The lady gave me a draw upfront that bounced and by the time I found out we had completed the job. I would've won in court but she immediately filed bankruptcy and I got zero. This was in Kentucky.

Now to your situation, I've got a bad feeling that this guy's busted and he's about to go belly up. If he goes belly up like that lady did on me, you're screwed. The check can be used against him because it's a contract in itself. But if he's busted like it sounds, this could be real bad. I hope I'm wrong. Good luck!

rsss396375

Contract or no, you will have to go to court to seek a judgment and then attach his wages, or some other form of garnishment. Typically, when you cancel a check at your bank, they will ask you the reason for the canellation, ie, stollen, lost, etc. They MAY not honor his request when he tells them, " I am trying to screw my contractor, so don't pay him." Then again, it is his right to cancel.

You have a good case in court (without a contract) to show that there was a meeting of the minds between you and him and work has been completed for a specified amount. You may need a lawyer to argue the finer points of the law. Is this small claims?

Did you release all material pre-liens and pay off the suppliers? You've got some nice wood there and I am sure it costs some $. I try to leave a balance due at the lumber store on big jobs for just that reason, but sometimes it doesn't always work out.

Brock

You want to screw the lumberyard because you don't know how to get a contract and conduct business properly? I would use the threat that the lumber co. is going to lien, but I would pay them. I pay them before the electric bill.

Leo G

That would be good news. If he wrote a check with no fund to cover it, it would be a crime. Bring that into court and you've already won your case. Tough thing is getting blood out of a stone. You've won but the money is non existant. But it is due to you and you will get it eventually. Better than no chance at all.

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bwalley

Stalking a client (which is what he will be accused of) is not going to be a good way to deal with the situation.

He needs to start the process of placing a lien on the property.

roof-lover

Did you think i was really talking about setting up a tent?
I am talking about being friendly and respectful.
I am talking about going to see them after they get home from work.

Stalking?? they owe him a lot of money.
He was expected to show up timely and act professional.
They are expected to do the same.
If they ignore his calls or his attempts to see/talk to them
than that looks very bad on their part if it ever goes to court.



I disagree for the moment. once that happens, it can be a long way away until he gets his money and it will be much less than the figure owed.

Please reread Bill Z post. please.

Did not the homeowner originally say that he wanted to talk?
Your just going to ignore that and file a lein???

Talk to the homeowner and accept the lower amount agreed too now and get your money NOW. Both Husband and wife Need to be present.

File a lein only as soon as you realize that the homeowner is being completely uncooperative.

bwalley

roof-lover,

The reason to start the lien process is, the HO may drag out negotiations long enough to allow the window of opportunity to file a lien to pass.

Sending out the appropriate notices will show the HO that he is serious about getting paid and the contractor is just following the law.

The HO may know the lien laws and using the line "we want to work with you" may be an attempt to run out the clock.

I agree talking to the HO is the best course of action, because the only people who win in a lawsuit are the Attorney's.

jaros bros.

Bill early. Bill often. The last payment for the job shouldn't be so big that it's going to hurt you. Every Friday I request payment. Initially, clients seem surprised by this, but after the first couple of Fridays, they have their checkbooks ready. It sounds like you have left a lot of money until the end. Try to stay away from financing someone else's construction project. They are taking the risk, not you.

Josh Jaros

bwalley

Josh,

You must have been to the same school of construction I went to.

After getting burned on the last draw a few times, I leave very little money owing by the time I am done.

I have also told people who don't like putting money down that I am a contractor, not a bank.

For some reason people think they should pay upon completion and their 100% satisfaction.

Leo G

I never leave more than 5% at the end. I only do smaller jobs in the $500-$30,000 range. If they don't like the payment schedule, I don't need their money.

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roof-lover

I mostly agree with that.

But I definitely would not want them to receive a certified notice to owner before i even had a chance to talk to them respectfully.
Thats all i'm trying to say.

Here in florida i think it is 45 days .
After a few days, i would realize that the homeowner is being uncooperative.

Once you send it, the fight is on.
remember the beligerant message the HO left on his phone?
Just think how belligerant they are going to become after they get that certified letter. It will be insane.
You think that they are going to be friendly and ready to talk and refer him to other people?

bwalley

In Florida you are not required to send a NTO when you have a direct contract with the client, many contractors still send them out, but they have to go out within 45 days of the start of the job.

The contractor or sub contractor has 90 days of last furnishing of work to file the lein.

Once the lien is filed, you have to notify the client within 10 days.