# Money issues as sub



## We Fix Houses (Aug 15, 2007)

Fortunately I have been in good demand too. Had the opportunity to work solely for a couple of customers 4-5 months in the last year. Not going to do it...Learned years ago it may take 30 days + to get on to the next job. Good luck with your deal there.


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## 480sparky (Feb 1, 2009)

Fouthgeneration said:


> ......theoretically, I could find your deadbeat and alert the IRS for 10 % of the money (unpaid income taxes) he owes on your unpaid work......


You don't "alert" the IRS. He would send the guy a 1099Misc for 'Forgiven Debt' if he never collects and decides to give up on getting paid. This allows him to write off the debt from your income (assuming he claimed it as income before), plus forces the contractor to pay income taxes on the unpaid debt.


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## bdog1234 (Feb 25, 2008)

Fouthgeneration said:


> Sadly your posting this has limited what You can NOW do legally....
> 
> Get a Lawyer/expert in this type of contract issue, don't waste $ on a probate village attorney....IMHO
> 
> theoretically, I could find your deadbeat and alert the IRS for 10 % of the money (unpaid income taxes) he owes on your unpaid work......


I have a friend who is a good commercial lawyer. He has handled some things for me in the past. I am not really concerned about any legal aspects at this point. I can cross that bridge when the time comes. My struggles at this point are deciding which direction to go. I am leaning towards cutting ties with him. I just hate to burn bridges but I guess if the bridge is prone to collapse burning it isn’t a bad thing.


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## KennMacMoragh (Sep 16, 2008)

Never fall for that when someone says 'I will make it up to you on the next job', that's total crap. People usually repeat their behavior, if he shorted you once then he will probably do it again. Set an appointment with your attorney and go over all your options. Remember lien rights have a time limit so you can't wait. If you wait too long to file a lien then your attorney will have fewer options for you.


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## Jay hole (Nov 12, 2013)

bdog1234 said:


> I have a friend who is a good commercial lawyer. He has handled some things for me in the past. I am not really concerned about any legal aspects at this point. I can cross that bridge when the time comes. My struggles at this point are deciding which direction to go. I am leaning towards cutting ties with him. I just hate to burn bridges but I guess if the bridge is prone to collapse burning it isn’t a bad thing.




The risk vs reward doesn’t seem very balanced in this situation.


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## griz (Nov 26, 2009)

bdog1234 said:


> I have a friend who is a good commercial lawyer. He has handled some things for me in the past. I am not really concerned about any legal aspects at this point. I can cross that bridge when the time comes. My struggles at this point are deciding which direction to go. I am leaning towards cutting ties with him. I just hate to burn bridges but I guess if the bridge is prone to collapse burning it isn’t a bad thing.


this guy has no respect for you and evidently does not care about your history etc...

if he is that broke he needs to disappear anyways...

imo, do not worry about burning a bridge, it has already collapsed.

as far as your contract wit him says you are not able to speak/negotiate with current/future clients, perhaps the contract has become null & void since you didn't get paid.

probably should talk to your attorney friend just to lay out the scenario and where you stand & your options.

Good Luck to you.


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## 91782 (Sep 6, 2012)

bdog1234 said:


> ..The guy used to have a larger company and all the machines to do this but he stopped operations years ago and just has a client base he built up over the years and when people call him he just has us do the work and marks it up for himself. I am 99% sure we are they only people that do any work for him. He has no employees, no crews, no office, nothing just him and his phone.
> 
> The work he gives us amounts to maybe 20% of what we do in a year. The rest of the work we do we contract ourselves. It is mainly a filler for us and has worked out well for both of us over the past 20 years. The jobs we do have very large gross amounts but also a ton of expenses. The vast majority of projects have six figure totals. Even if he just marks it up 10% he does quite well for himself as he has virtually no expenses. He is just relying on his contacts and company name which he built up decades ago.
> ..


Then maybe its time for him (and you) to give up the charade, and have him come work for you as a salesperson.


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## KAP (Feb 19, 2011)

I guess what it really comes down to, without any new arrangements of being paid ahead of the draw on the next job (i.e. - as opposed to being paid AFTER he is paid), he is asking you to trust him with more than 10X the exposure that he was willing to short you on in the first place...

No matter the relationship, after the first breach of trust, he'd have to have a pretty solid reason for you to even consider exposing you, your business and your family to such a liability... he may be 20% of your volume but can you absorb such a loss if he has another personal emergency?

From your various posts, I think you already know the answer...

Consider, if he's that confident that you'll be paid in full on the next job and was really going to commingle the funds from one job to another to make you whole with the next large job, there should be no reason from his perspective why the draw you already have couldn't be applied towards the previous balance... 

But based on what you've posted, his lack of capital, etc. it's doubtful that his confidence in that would actually hold up... and that should tell you all you need to know... ONLY way forward is one he is not in a position to do... written contract with draws ahead so you're not exposed... 

That should inform your decision from a business perspective... I'm sure he's generally a nice guy, you have a good relationship, etc. but is it such a relationship that you're willing to expose yourself at over 10X the amount you just got stiffed on? 

Keep in mind he didn't even tell he was having an issue until AFTER he was paid and it became due...


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## bdog1234 (Feb 25, 2008)

SmallTownGuy said:


> Then maybe its time for him (and you) to give up the charade, and have him come work for you as a salesperson.


I agree 100%. I have known this guy twenty years and there are a lot of pride issues. He had a very large and successful business at one time. He is older and really couldn’t run his own show anymore but he likes to think he still can. What happened to him is all his equipment was flat worn out and would have cost millions to replace at a time when our industry was in the dumps. He couldn’t justify that kind of expenditure when there was little to no work so he pulled the plug. By him still keeping his shingle out there and getting jobs and having us do them he feels like he is still in the game. He likes to think some day he will start up his own operation some day but I don’t ever see it happening.


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## EricBrancard (Jun 8, 2012)

bdog1234 said:


> I agree 100%. I have known this guy twenty years and there are a lot of pride issues. He had a very large and successful business at one time. He is older and really couldn’t run his own show anymore but he likes to think he still can. What happened to him is all his equipment was flat worn out and would have cost millions to replace at a time when our industry was in the dumps. He couldn’t justify that kind of expenditure when there was little to no work so he pulled the plug. By him still keeping his shingle out there and getting jobs and having us do them he feels like he is still in the game. He likes to think some day he will start up his own operation some day but I don’t ever see it happening.


Have a sit down with him and make sure he understands the reality of where things are headed. Lay out a vision for his role in your future business as you see it in a manner that would be mutually beneficial for all parties. If he’s not receptive then you will have to lay out the lack of his role in your future business which could result in the lack of his future business. If he’s smart he’ll be receptive to this and you guys may be able to figure out a better dynamic to move forward with.


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## Deckhead (Dec 9, 2010)

Tell him he doesnt have to pay you back a certain portion if it means you bought his business. Use his name, keep him on as an officer but all money he sells goes through you before he gets his 10%. Nothing changes except the bank account the money initially goes into.

He ever wants to start the business again, he has to buy it back.


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## 480sparky (Feb 1, 2009)

Another tact would be to offer to become an investor in his company. Ask to see the books, do a financial analysis, then say you'll put up $X in exchange for Y% of his business.


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## KennMacMoragh (Sep 16, 2008)

Guys, the best legal advice to give him would be to keep his mouth shut. He should let his attorney think up whatever kind of deal, arguments, and threats to make. I don't think any of us has passed our bar exam. Why would you want a trades person to pretend to be an attorney? That's the kind of thing I see people get themselves into more trouble than where they started.


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## Kowboy (May 7, 2009)

KennMacMoragh said:


> Guys, the best legal advice to give him would be to keep his mouth shut. He should let his attorney think up whatever kind of deal, arguments, and threats to make. I don't think any of us has passed our bar exam. Why would you want a trades person to pretend to be an attorney? That's the kind of thing I see people get themselves into more trouble than where they started.


Because lawyers can be real dumbasses when it comes to business. I've weighed and disregarded legal advice several times and have been vindicated every time.


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## Calidecks (Nov 19, 2011)

A good lawyer will tell you what you don't want to hear. I make a call to my attorney and he starts the clock by the minute. I'm okay with that. 


Mike.
_______________


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## Fishindude (Aug 15, 2017)

KennMacMoragh said:


> Guys, the best legal advice to give him would be to keep his mouth shut. He should let his attorney think up whatever kind of deal, arguments, and threats to make. I don't think any of us has passed our bar exam. Why would you want a trades person to pretend to be an attorney? That's the kind of thing I see people get themselves into more trouble than where they started.


No need to get the lawyers involved yet. Just start crowding the guy real hard for payment and don't take on any new projects with him. 

I've had a lot better luck taking care of collections personally. Anytime you get the lawyers and judges involved, everybody loses.


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## 480sparky (Feb 1, 2009)

Fishindude said:


> ...... Anytime you get the lawyers and judges involved, everybody loses.


Lawyers don't. :whistling


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## EricBrancard (Jun 8, 2012)

480sparky said:


> Lawyers don't. :whistling


By design.


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## Warren (Feb 19, 2005)

I do quote a few labor intensive jobs also. Even with guys I trust, I will get draws along the way. It's not a matter of whether I need the capital, but more so to avoid your dilemma. If that sink is sinking after all those great jobs, there are problems that are not gonna be made whole on one job, no matter how lucrative he makes it appear.


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## VinylHanger (Jul 14, 2011)

You are operating on a level way above my pay grade.

However, do the numbers even match up for him to have an extra 50,000 grand or so to pay you back?

How much is he expected to make by paper pushing and still have 50,000 to essentially lose on the new job?

Maybe sit and ask him that question. He may think he can, but it might not even be realistically feasable.

Sent from my SM-N975U using Tapatalk


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## EricBrancard (Jun 8, 2012)

VinylHanger said:


> You are operating on a level way above my pay grade.
> 
> However, do the numbers even match up for him to have an extra 50,000 grand or so to pay you back?
> 
> ...


It’s easily possibly that he would. It sounds like a cash flow issue more than anything else. If this “emergency” was a non reoccurring cost, it could have created a cash flow shortage that smooths back out on the next job or jobs.


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## KennMacMoragh (Sep 16, 2008)

Kowboy said:


> Because lawyers can be real dumbasses when it comes to business. I've weighed and disregarded legal advice several times and have been vindicated every time.


Doctors can be dumbasses too and give you bad advice, when that happens I see a different doctor. This isn't the kind of thing you fight on your own. How often does a contractor battle this on his own and win?


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## mapleaf18 (Apr 11, 2020)

Not to hijack, but we have had a similar problem. The client had a contract with the GC for fire remediation. She got paid directly from NFA and State Farm. According to the GC, she stopped paying because she "didn't like the drywall work" (we didn't do the drywall) and was angry because she didn't get an "upgraded furnace filter."

NFA has no knowledge of the GC in their books. The code enforcer issued a stop work order and she ran out and got another permit to have her "friend" finish the work (aka fire up the furnace and A/C we put in). We have filed a mechanic's lien against the client and named the GC on it as well

It's over the small claims court limit. Frustrating! That and others using Covid as an excuse not to pay for work already done (mostly commercial clients). Funny we all have to pay OUR bills...


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