# Customer owes 20k and won't pay....



## Handyman33 (Jul 30, 2008)

I am a long time reader and I’m sure that this has been covered before. But, I’m in bad spot so I’m asking for some ideas and help with a nightmare customer. 

My background is of mixed experience from many construction jobs and I have a degree in construction management. Thus, I have some good experience and years under my belt, but still recognize that I have a lot to learn with regards to the industry. I took this job from a referral basis through a realtor that I have completed work for. I am a small self proprietor and was excited by the prospect of a nice larger job that would keep me busy for some time…Here is the story….

I have a customer that I signed a contract with for “X” amount of dollars for designated scope of work. There were lots of changes and “upgrades” if you will. I unfortunately, did not get it all in writing but my contract does say with “homeowner’s approval”. Now, to me, that’s includes verbal approval. But, in a court or arbitration that may not exactly hold up I understand. My defense is the fact that the changes were so numerous and often, while physically working on the job myself, it was difficult and time consuming to stop and write something up for every little thing. Some of the changes were with regard to allowances and they were all verbally approved and executed per the homeowner’s direction. I don’t work for free and don’t make it a habit of doing things out of the goodness of my heart just “because”.

Long story short, it came time to submit a final invoice for the remaining amount and the changes approved by the homeowner. I went over and above and beyond to satisfy the customer and even had other subs come in to refine open items and completed punch lists to their liking and satisfaction. I gave the customer the final invoice and they basically went through the bill and subtracted things they said were “not approved and not asked for”. They wrote me a check for less than half of what I was owed and asked me to leave. They still owe nearly $ 20,000.00. It is a lot of money to me and now I am in deep credit card debt from the materials and purchase made and installed on the job. They have no regard for the contract and have no intentions to pay me. 

I know a mechanics lien is an option, but I still have to file a suit to collect. I don’t have money just lying around to sue them with. I consulted a lawyer but he said that it will come to a settlement and cost lots of time and money involved. 

Anyone have any experience or advice? Ideas on how to collect? Options? It would be greatly appreciated…..I’m in a really bad spot.


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## BamBamm5144 (Jul 12, 2008)

Hopefully you still warranty your work!

Hehehehe


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## Handyman33 (Jul 30, 2008)

warranty...HAHAHAHa...thats good. But I'm sure they will call about something and they will get about the same response.


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## Warren (Feb 19, 2005)

The worst thing about this is that you probably can't afford the time and money that will be needed to get through court. Sounds like the homeowners know th as well. I once went to court over 10k. I had the ability to float that until things were settled. Four months later, I received my money, but after attorney fees it was only about 8500. That was with me filing the lien myself. I don't think you will get out of this one without an attorney. Other than that, your best bet would be to make some concessions to the homeowner and cut the final bill to reach an agreement. You let them get into you for way too much. Hopefully this will work outand you can take your lumps, move on, and learn.


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## Chris Johnson (Apr 19, 2007)

Yea, go back to working for someone else...you don't have the experience to be running the company you have right now.

Here

Ignorance of the law is no excuse

Apply that to your story and you might get it

Working hands on and not having time for change orders is not an excuse for doing the work without an agreement.


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## griz (Nov 26, 2009)

Were you legally licensed to perform the scope of work?

You control the pace of the job. I don't buy in to that the changes were so numerous and so often you did not have time to deal with them in a correct & proper manner. Sounds to me that you saw dollar signs and HO's knew this.

How is your contract worded to deal with scope changes & change orders?

File a lien & speak with an attorney familiar with construction law.
By the way you won't find the attorney's number on an infomercial.


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## kevjob (Aug 14, 2006)

Intent to Lien letter with a letter demanding the balance due with a letter explaining all the verbal additions with dates if possible. 

If they dont respond file lien immediately after 10 day intent to lien has expired. 

Get a carbon copy type change order form today and never get put back into that situation again. All change orders shall be paid BEFORE work commences, add that line to your contract.


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## greg24k (May 19, 2007)

Guys above brought up some good points so I will stick my 5c into this.

1st and for-most, you don't trust anybody... you're running a business and everything customer agrees to it, it should be done in writing and have a signature which makes a legitimate claim if there is a problem... or a good way to conduct business is get paid for all the changes or upgrades up-front. I have been doing this way for as long as I been in business and I never had an issue or had to chase my customer to get paid. You want this item, pay for it now, if not, think about it and let me know in a day or two before its to late. Period.

2nd, you carry someone for 20k if you in a banking business...because you have to be out of your mind to lay out 20k without anything in writing. Good luck collecting that.

3d, Your lawyer is right, your chances getting paid for everything are slim to none. Especially like Griz said if you not licensed to do the work, then you will get nothing.

4th, try to get your money without the court, if not... you will need a lawyer because 20k exceeds small claims court, so you have to go and play with the big boys and in the mean time your interest on your cards is growing, and if you don't pay it will mess up your credit, so best option would be the court and not filing a lien, because that can drag out for a long time and you can only recoup some of it, so you might be in a worst position then you're in now... so watch yourself.

Good luck


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## We Fix Houses (Aug 15, 2007)

You got caught up in the nice guy syndrome.......If I work my ass of for the customer they'll understand....? They probably thought you were expending all this effort because you're a nice guy and servicing them to the enth degree - never any talk of paying for anything from you or them ?

You probably also agreed to everything they asked everyday and was so helpful....? I say less now than I ever have to customers. 

Use your credit cards to hire a lawyer to go as far as you can to collect.

I agree with the above. You probably shouldn't be working for yourself.


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## overanalyze (Dec 28, 2010)

This situation is a bad one. It is not going to get solved without an attorney. But this is also what burns my a$$ about people thinking contractors are just out to screw them. It sounds like the homeowner knew exactly what they were doing and it kills me that people have no ethics anymore.


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## Handyman33 (Jul 30, 2008)

There is clearly more to the story than the short version I gave. 
Yeah the lawyers aren’t cheap; they want 1/3 of anything collected from the deal. They are willing to take it on a contingency basis, but if it goes beyond what they think it will take, obviously cost more money. I am just not willing to just walk away on principle alone. 

I will admit I made some mistakes with paperwork, but nothing to warrant the homeowner being a crook like this. I’m not completely ignorant of the facts but nevertheless I was excited to have a large job that was going to keep me busy and pay decently. I wasn’t by any means overcharging or ripping anyone off, for god’s sake I only charged 5% overhead and profit. 

I did get paid a large deposit and progress payments, so I was not bankrolling the whole project. I should have structured my pay schedule differently so that it was slanted in my favor more. The final payment was to pay for the last of the supplies and leave me something. Towards the end of the job I asked for payments and it got ignored so put work to a stop and pulled everyone off. Their response was that they were going to hire someone else to finish it and deduct from what was owed; which was too substantial to walk from. So I caved and work resumed when they made a small payment to continue things.

As far as licensing goes, the homeowner was trying to play contractor and hired out her own electrician and plumber to have those aspects of the work done. My end of the deal and contract required no licensing or permits as it was tile, paint and trim carpentry. 

The customer totally knew what they were doing as they are both employed bay large firms and are very familiar with litigation and lawyers. I have since found out that they chose me because they knew I did good work, and I was a small contractor. They figured they could steamroll me and saw me coming from mile away. I did some more digging and found out through other sources they have been through a few contractors and even made some of them walk away from decent amounts of money because of the crap they pull being crooked scammers.


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## Anti-wingnut (Mar 12, 2009)

overanalyze said:


> This situation is a bad one. It is not going to get solved without an attorney


There are alternative fixes


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## TxElectrician (May 21, 2008)

Put you a nice little 4'x8' sign in the back of your truck that says" Mr. azzhole refuses to pay me my money" and drive it around his office, or park it at the store across the street.


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## thom (Nov 3, 2006)

The reality is, you were played. 

Hire a lawyer on contingency and you will be played again. 

The only way to do this is to pay a lawyer by the hour, hire a very good one (expensive) and pay the man. My experience is 2 to 3 years to get a judgment. 

In your case, the stuff isn't in writing. Basic business law is, everything in Real Estate must be in writing for it to be binding. Verbal contracts are in fact not contracts and are not binding in Real Estate (generally). 

So, I think you just spent $20K on some legal education. You are not the first contractor to be abused by HO's nor will you be the last.


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## kevjob (Aug 14, 2006)

I would also contact the district attorney and tell them what is going and see if they can assist or guide you in any way. The way it sounds is they have a pattern for this which will show pre-meditation on their part.


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## DavidC (Feb 16, 2008)

This is going to hurt.

But that's why it's called The School of Hard Knocks. And certainly if you are going to take a stand on the basis of principle regarding a financial decision you can expect a swelling of the tuition.

First, legal advice is best obtained from an attorney to whom you pay a fee.

Secondly, put aside all other concerns until your attorney tells you that your contract has a chance of standing up to court scrutiny. In my state, if your contract does not meet state standards then you loose regardless of the facts.

Thirdly, if you got this far you already know you should be talking to your attorney.

I realize how this may sound to you because I've been in similar situations. It's not what you want to hear. But if you take the right steps there is no reason for you to ever be this pinched by a client again. Hire your attorney to write you a decent contract that they could defend. Use that contract for every job. Do not deviate without written change orders that become a part of that contract. Within that contract, set up a payment schedule that keeps you ahead of the cashflow and make sure CO's are paid for as they are produced. Keep your last payment as small as you can.

Good Luck
Dave


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## SSC (Feb 8, 2011)

Dont trust anyone- even if you've done 20 projects at their house over the last 20 years.

Ill be honest i dont always do change orders for everything. But . . . 
$20,000 worth of change orders?! thats just crazy.


I would get a few more opinions from other lawyers if you haven't done so already. And do it soon.

Good Luck


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## Handyman33 (Jul 30, 2008)

its not 20K worth of changes..its what was left over with the changes added in.


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## RhodesHardwood (Jun 28, 2010)

Sorry to hear about this. Just get yourself an attorney. Best of luck with this.


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## ohiohomedoctor (Dec 26, 2010)

I do not understand how you just did paint, tile, and trim and ended up with 20,000 as a final payment. 

Also never pay for there stuff on your credit cards.

Settle this with them in a calm professional manner. :gunsmile:


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## dave_dj1 (Mar 16, 2010)

It sucks no doubt! 
I think it was fine homebuilder that did an article stating that 1 in 5 HO's are out to screw the contractor.

No matter the outcome of your predicament, let this be a lesson for ALL future contracts and change orders.

Hold you line, My brother took a client to court without legal council and won, this was for breach of contract. The owner of the project is now in foreclosure, scumbag got what he deserved.

I would go with the 4x8 sign in the back of the truck idea, I like that one :clap:


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## TNTRenovate (Aug 19, 2010)

ohiohomedoctor said:


> I do not understand how you just did paint, tile, and trim and ended up with 20,000 as a final payment.
> 
> Also never pay for there stuff on your credit cards.
> 
> Settle this with them in a calm professional manner. :gunsmile:


If you read it, he got paid half of what was owed for the final and was left with 20k not paid. That means that it was 40k on the final, and whatever else was on the deposits and payouts.

Sorry to the OP, but you learned that you can make time for 20k. I always go back to the office, write up all Change Orders, e-mail them to the client, call and make sure they received it, and let them know that I expect a deposit on the work first thing in the morning. If there is no $ and no signed C/O, I don't do the work.

Rob


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## ohiohomedoctor (Dec 26, 2010)

TNTSERVICES said:


> If you read it, he got paid half of what was owed for the final and was left with 20k not paid. That means that it was 40k on the final, and whatever else was on the deposits and payouts.
> 
> Sorry to the OP, but you learned that you can make time for 20k. I always go back to the office, write up all Change Orders, e-mail them to the client, call and make sure they received it, and let them know that I expect a deposit on the work first thing in the morning. If there is no $ and no signed C/O, I don't do the work.
> 
> Rob


Rob, I read it. Sounds like a $50,000 job for just tile, paint, and some trim work. Must be some house.


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## VinylHanger (Jul 14, 2011)

I'll float 4-500 bucks or maybe a grand if I'm feeling generous. Many times it is just a matter of scheduling and I can't wait to be paid in order to get materials and move the job forward. But to float 40,000 hoping to get it in the end. No way.

The only time amounts like that are in play is for large commercial/multi-family dwelling projects. You have to front the materials to the job, then bill out for them. If you don't get paid, you don't get started. You will get paid. I've never heard of a "simple" residential tile, paint and trim job that ran that far ahead. Were you paying the subs as well?


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## bluebird5 (Dec 13, 2010)

You story sounds wierd. All this money for tile, trim, and paint? 

Well anyways thats beside the point. You did what you did.

Step 1 learn your lesson
Step 2 Hire a lawyer sue their asses. Even of the lawyer does take a third. It would still allow you to at least pay for the materials and break even. Am I right? Breaking even is better that filing bankruptsy (however you spell it)


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## Jaws (Dec 20, 2010)

ohiohomedoctor said:


> Rob, I read it. Sounds like a $50,000 job for just tile, paint, and some trim work. Must be some house.


 Damn dude that ain't that high. I've done showers where the tile and labor was 15000. A 6000 ft house custom paint interior and exterior, would be 35 to 50000 depending on cabinet finishes, for my crew. Maybe more. 3 step crown, 2 step base, custom cabinets ..... easily 50000


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## Splinter hands (Aug 31, 2011)

IMO you should have been getting some kind of progress payments so at the end of the job there was maybe 10% of the total job cost to be made upon completion. If the progress payments stopped so would the work. You would have never ended up with such a large payment due at the end of the job. And never charge materials for a job on your credit card, don't you have some kind of account with your suppliers? Charge materials to different job accounts with your supplier? If you did then you would also have some "backup" so to say because your supplier would also be getting screwed. The final payment should have never been that much though. It's a hard lesson to learn. You can bet this situation is going to be a PITA for sure.


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## Handyman33 (Jul 30, 2008)

its a 3 million dollar house with 8 baths...tile adds up. so does paint.


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## griz (Nov 26, 2009)

Just a guess...

But these folks knew exactly what they were doing...

This is going to be a tough call...and likely a very expensive lesson...

You are probably not the only one on the job in this boat...

When attorney's get involved in a arbitration/suit they are the only ones who will make money. 

You may prevail after a few years in the court system...but who knows what you will get...

Once again, My take is, you saw a big job & $$$$$ they smelled blood in the water...

Good luck...:thumbsup:


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## svronthmve (Aug 3, 2008)

griz said:


> Just a guess...
> 
> But these folks knew exactly what they were doing...
> 
> ...


Exactly my thoughts too. 

I think the OP was in over his head & way out of his league business wise. 

Sorry to see this happen, but it's one of the hardest "degrees" the school of hard knocks bestows on graduates. Definitely won't be forgotten soon!


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## Solar Control (Jan 27, 2009)

svronthmve said:


> Exactly my thoughts too.
> 
> I think the OP was in over his head & way out of his league business wise.
> 
> Sorry to see this happen, but it's one of the hardest "degrees" the school of hard knocks bestows on graduates. Definitely won't be forgotten soon!


Almost all of us have been there. *I have*.


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## SSC (Feb 8, 2011)

You have to pretend that everyone is going to screw you given the chance.

Don't give them a chance - EVER!


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## TNTRenovate (Aug 19, 2010)

ohiohomedoctor said:


> Rob, I read it. Sounds like a $50,000 job for just tile, paint, and some trim work. Must be some house.


I was thinking the same thing you were when he said it was paint, tile and trim. Either that is some big house or someone saw $$$$ and decided to pad the bill....A LOT!!! :laughing::laughing::laughing:


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## DavidC (Feb 16, 2008)

Handymann33, it sounds like the choir is singing in unison. So what is your next step?

Good Luck
Dave


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## Jason Whipple (Dec 22, 2007)

You might try contacting the others who got run off and get affidavits from them about being short paid. Also talk to the other sub's and see if they were paid 100% for there work. This can help show a pattern that the home owners don't pay the bills.

I would go ahead with the lawyers on contingency if you can't afford to float the fee's up front. Even if you only get half in the end it's better than the zero $ you'll get if you do nothing. Don't make any discounted offers in writing to them about the final payment either unless the lawyer thinks that's the way to go.

Not sure if you have a contingency in your contract to waive law suits or settle disagreements to contracts in arbitration or not but it might be a good time to add that in. Courts can be a very expensive way to settle things.


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## J F (Dec 3, 2005)

If it hasn't been mentioned already, keep some blank C/O forms with you at all times on a project (or in your vehicle). Then, you've got it there and can fill it out and have it signed when the extra work is requested.

Some wording from a basement contract:

_E. CHANGE ORDERS, CONCEALED CONDITIONS, ADDITIONAL WORK, AND
CHANGES IN THE WORK 


1. PEOPLE AUTHORIZED TO SIGN CHANGE ORDERS: The following people are authorized to sign Change Orders:

*********xx__________ (please initial)

*********xx__________ (please initial)

----------------------------------------------------------

3. CHANGES IN THE WORK: During the course of the project, Owner may order changes in the work (both additions and deletions). The cost of these changes will be determined by the Contractor and the cost of this Additional Work will be added to Contractor's profit and overhead in order to arrive at the net amount of any additional Change Order work. In addition, there will be an administrative fee of $150.00 added for each change order.

Contractor's profit and overhead, and supervisory labor will not be credited back to Owner with any deductive Change Orders (work deleted from Agreement by Owner).

Change Orders will be paid for *prior to any Change Order work being started.*
_

I almost never charged the $150, unless it required drawings, etc for the C/O, but it was there for anyone who started to request a bunch of additional work at different times and then didn't want the work done. :laughing:


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## KnottyWoodwork (May 23, 2010)

Are the cards under you personally, or your business? 

While this answer isn't something I could do unless a last chance, save my family choice. It has been done to me, more than once.

Have you thought of the company claiming bankruptcy, and re-structuring? I think it's technically called chapter 13. It's not the morally best practice, but would it be the best business wise? While it may be hard, you have to take the emotion out of it. After all, that is what got you into this in the first place.

It seems commonplace in business practice. It's part of why the statistics for this business are what they are. Seems there's a corporation going this route every couple months.


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## PrecisionFloors (Jan 24, 2006)

ohiohomedoctor said:


> Rob, I read it. Sounds like a $50,000 job for just tile, paint, and some trim work. Must be some house.





jawtrs said:


> Damn dude that ain't that high. I've done showers where the tile and labor was 15000. A 6000 ft house custom paint interior and exterior, would be 35 to 50000 depending on cabinet finishes, for my crew. Maybe more. 3 step crown, 2 step base, custom cabinets ..... easily 50000


:thumbsup:



Handyman33 said:


> its a 3 million dollar house with 8 baths...tile adds up. so does paint.


Exactly. 



TNTSERVICES said:


> I was thinking the same thing you were when he said it was paint, tile and trim. Either that is some big house or someone saw $$$$ and decided to pad the bill....A LOT!!! :laughing::laughing::laughing:


It amazes and reminds me why contractors are some of their own worst enemies. You guys talkin smack and ASSuming he was ripping someone off need to realize you obviously have little experience with high-end work or you wouldn't be talking out of your ass :whistling I've seen stone jobs alone run upwards of 50K once a few showers and medallions are thrown in. Do you guys even realize what material costs are on some of this kind of work. These aren't jobs supplied by going to Home Depot every day on the way to work 

Don't ever begrudge another contractor for his ability to actually get paid to perform a service. Many of us have spent many years educating ourselves, spilling blood, sweat, and tears attempting to become the best at what we do. Then you get upset because you don't have the balls to charge what we do, and have the audacity to imply we are ripping someone off when you don't have the ability to provide the same service. 

How about when you see a large number on a contract, instead of thinking "man they're getting ripped off" you look inward and find out why you aren't providing adequately for your future. We're all gonna be too old for this **** one day....I for one don't wanna be a 65 year old tile setter because I didn't figure out how to run a business. :thumbsup:


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## Jaws (Dec 20, 2010)

KnottyWoodwork said:


> Are the cards under you personally, or your business?
> 
> While this answer isn't something I could do unless a last chance, save my family choice. It has been done to me, more than once.
> 
> ...


 Just take lumps and be a man. Passing bad debt off is no way to do business. OP, I feel your pain, but you should of written change orders and you didn't, now all you can do is protect your name and do whatever is in your power to get your money.

Precision, I'm 100% in agreement. Doing high end work requires paying more for labor, materials, ect. I'm not saying I know the OP is a high end contractor, but someone who does top end work should be payed for their knowledge and ability.


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## larryb (May 23, 2008)

Rpeat after me...change order w price, signature, check change order w price, signature, check change order w price, signature, check...

Explain your situation to an experienced construction attorney. 

Legal opinion found in ARTISAN DESIGN BUILD, INC., Plaintiff-Appellant, v. DAVID BILSTROM and JODY BILSTROM, Defendants-Appellees. While from a different state, the language, meaning and intent is essentially the same anywhere.

"the failure to provide a written contract does not preclude a contractor's recovery in _quantum meruit_,". 

Definition of Quantum Meruit; Latin for "as much as he deserved." A principle used to award the reasonable value of services performed by the victim of a broken contract.

In plain english: even though you messed up by not getting requested changes/additions on paper, the HO requested them and expected they would have to pay for them - "as much as you deserved".

A good attorney should be able to clarify for you and if so, you'll have a good chance of getting your money without going to court. The consequences of the HO not "coming clean" could do damage to their pocket books and their reputation.


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## Shellbuilder (May 14, 2006)

I would really research their income, debt, mortgages etc allto the best of your ability. It may be in your best interest to let the lien ride. Always offer a note instead of allowing the construction to be argued in the suit. Remember no matter how good you think you are at construction, somebody else will come to court and say it's all wrong.


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## griz (Nov 26, 2009)

What did the job entail?
Venture outside of scope & contract?

Just curious, how you got 20g behind the 8 ball...

Good Luck...:thumbsup:


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## rdr8887 (Jan 28, 2012)

If you don't have time to write a change order, send an email and have them confirm. It's better than nothing.


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## sunkist (Apr 27, 2012)

i would love to here the other side of this, 20 grand is a lot to chase, did we go above and beyond the scope of work wanted in our excitement?, or did it take 3 days to hang a door at $25.00 ph etc?.


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## KAP (Feb 19, 2011)

Handyman33,

Change Orders should be handled as per your existing payment schedule, but if work has already commenced, you should collect 100% of the money UPFRONT for all change orders in the future.

If you have more than five (5) change orders during an average project, there is something wrong with your specification process...

You have to have something other than "verbal" evidence, otherwise, it is he-said-she-said and the courts side with the HO when it comes to this. 

Don't you have any notes, dates, emails, texts?


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## kage (Aug 17, 2008)

All his neighbors, his work area and thru out town would know what he did...and it would go on until payed...


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## American1 lawn&landscape (Jan 30, 2021)

Handyman33 said:


> I am a long time reader and I’m sure that this has been covered before. But, I’m in bad spot so I’m asking for some ideas and help with a nightmare customer.
> 
> My background is of mixed experience from many construction jobs and I have a degree in construction management. Thus, I have some good experience and years under my belt, but still recognize that I have a lot to learn with regards to the industry. I took this job from a referral basis through a realtor that I have completed work for. I am a small self proprietor and was excited by the prospect of a nice larger job that would keep me busy for some time…Here is the story….
> 
> ...


Sue for double.


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## Pounder (Nov 28, 2020)

American1 lawn&landscape said:


> Sue for double.


Nine year old thread. The issue is almost certainly settled by now.


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## 480sparky (Feb 1, 2009)

Pounder said:


> Nine year old thread. The issue is almost certainly settled by now.


I'm sure American1 is setting himself up to start asking about why HE isn't getting paid.


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## Pounder (Nov 28, 2020)

480sparky said:


> I'm sure American1 is setting himself up to start asking about why HE isn't getting paid.


Almost certainly. 
It was weird looking at the list of new posts and seeing thread after thread of guy's not getting paid. Made me wonder if the economy had crashed last night while I was asleep.


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## VinylHanger (Jul 14, 2011)

Pounder said:


> Almost certainly.
> It was weird looking at the list of new posts and seeing thread after thread of guy's not getting paid. Made me wonder if the economy had crashed last night while I was asleep.


Nope. That's next week.

Sent from my SM-N975U using Tapatalk


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## StabMasterArs0n (Nov 17, 2020)

Dollars to doughnuts he's still out in the could on this one, but we may never know. Schrödingers payment. He's either alive or dead. Hopefully other builders read this and understand the risks they take when they have this kind of exposure.


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