We're firing our GC -- please advise!!

michoumonsterFebruary 10, 2012

Hi everybody, this forum has been a generous source for info and inspiration. Previously, i asked about protective measures on GC cash issues and received a tremendous amount of support and sage advice. After trying to monitor our GC's purchases and paying subs directly, we have come to the conclusion that unfortunately, the gc we picked is from an incorrigibly crooked lot . we feel we can no longer continue building and risking our dream home with this guy. We are working with a good lawyer on the termination documents so i think we are covered from that perspective, but i wanted to see if any of you could offer any hands-on practical tips on how to go about ending this relationship? Do i need to worry about potential vandalism or theft, for example? How would a new gc step in? What to do about temporary utilities that were filed to GC's account? How do we make sure gc doesn't open more accounts using my property as collateral? Thank you for any advice! I hope to post pics of a finished build like so many of you have some day...

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If the builder has any personal possesions at your build site such as tools or equipment, only allow for pick up if you are there and possibly the services of the sherrif's dept. as an escort. Don't allow him on site without you or authorities present.

    Bookmark   February 10, 2012 at 11:22AM
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Make sure you check with your lender on firing your GC too. That can get VERY messy. If you're not going to take over as GC yourself, you will need to find another one that is willing to take over where this guy left off. I would worry about any type of warranty on the build--the new guy isn't going to want to warranty it and if the first one isn't finishing it, then he won't want to warranty either. You could end up with the house falling down and no one to go back to.

Before you fire him, have you posted what is happening to verify it's not just one of those times where it's "just how things are done" that don't seem to make any sense to those of us without the benefit of GCing houses for years and years? It's possible that the vast majority of builders in your area are operating in the same manner. Since you had previously asked about how to protect yourself, it stands to reason that you probably checked this guy out pretty thoroughly before signing with him--so what went wrong?

    Bookmark   February 10, 2012 at 1:36PM
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The procedure for terminating a construction contract is normally spelled out in the contract's general conditions but the termination section might have been omitted if the contractor wrote the contract. In any case, read whatever is in the contract very carefully and review the terms with your lawyer.

Often in this situation one of the sub-contractors takes over the general contractor's role if that is allowed by the building department.

    Bookmark   February 10, 2012 at 2:22PM
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sierraeast, thanks for the tip on how to allow him to pick up equipment. do you know if a sherriff escort is standard and something that you can schedule?

renovator8, thanks for the advice on how to takeover the GC role. we and our lawyer will look through the termination contract carefully. from what i can tell, it is quite vague. there is no qualified sub to take over, so either we will have to take over or find someone quickly. i will call up the building department to see how it is done.
mydreamhome, thanks for the info regarding warranties. i am not sure at this point if we will have any warranty. but the behavior of our current GC has indicated he would never have honored his warranty any way. we are 110% positive we need to fire this guy. when i previously asked about protecting ourselves, he was just asking for advanced payments which raised our concerns. we did comply to a few of his requests for money because we felt bad for him during christmas and our lawyer told us that it was typical for GCs to be cash-strapped and that we needed to find a balance with payments and work to get our house built. unfortunately, monitoring his spending was very time consuming and the balance of monies has tipped to the point that we would be losing money because all of his supplier accounts are past due and forcing us to pay. And it has come to light that he had been purchasing for other projects using our accounts (explaining why he was way over budget).

    Bookmark   February 10, 2012 at 3:52PM
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oh michoumonster, I have been in your shoes so this is experience talking...

1) Review your contract with your attorney to make SURE you follow whatever requirements it has for termination.

2) Also have your attorney review every single you or your builder has ever signed that is related to the house or the land it sits on...including loan documents. Among other things, you want to make absolutely sure your builder doesn't hold a "residual lien" against your home. A residual lien can come into being where the amount your banker agreed to loan you to build was less than your contract price so that you were going to make up the difference out of pocket. In such a case, the lien documents may have been written so that you gave your builder a lien for the full amount of the build then your builder assigned a portion of that lien (the amount of your loan) to your bank. The unassigned part is called a residual lien and, when you gave your builder money directly out of your pocket for that amount, he should have given you a lien release. If your builder doesn't give you a lien release for a residual lien he holds, you'll have a major problem. Since you have an attorney, just mention the possibility to him and ask him to make sure the builder doesn't have a residual. Your builder might not think to check for a residual lien but once you mention it, he should be able to determine if one is in existence.

3) DO NOT WARN YOUR BUILDER that you are planning to fire him or even thinking seriously about doing so. Let your attorney guide you as to when and how to break the news to your builder.

4) Ask your attorney if he will go with you to your banker to discuss your options with regard to financing after firing your builder. Be aware that, as a general rule, your banker is under no obligation NOT to tell your builder that you are thinking about firing him. You MAY be able to impose a confidentiality obligation on our banker by raising the issue as a theoretical one on which you are seeking confidential FINANCIAL advice but that may or may not wash. I suspect tho your builder will be less likely spill the beans prematurely if your lawyer is with you when you talk to the banker.

5) Find out what your state's laws are regarding any mandatory warranties. If, for example, your builder completed the foundation and framing and your state has a mandatory warranty on those items, he SHOULD be on the hook for them even if you fire him before the house is completely finished. But, be aware that even state mandated warranties won't do you one bit of good if your builder declares bankruptcy and gets the bankruptcy court to discharge his warranty obligations. A warranty is only as good as the entity granting the warranty so I wouldn't let trying to hang onto my warranties stop me from firing a crooked GC.

6) Get a good digital camera and digital video camera and document EVERYTHING about the status of the house before you fire the builder. Be sure the time and date stamp on the camera is set correctly. Take about a gazillion photos from every possible angle, close-ups and wide-angle shots. Do one room at a time and stick labels to the walls so that you can know exactly what room and which part of each room each photo is a picture of. Don't forget to photograph the outside of the house and the attic and basement areas as well. Do not let there be a square inch of the house and grounds that doesn't clearly appear in at a couple of photos and videos. Upload everything to your computer and then save it all on CDs or DVD (it'll probably take several) in case your hard drive should fail. And give copies of everything to your attorney.

7) Check with your insurance agent about getting insurance on the partially built house to cover any vandelism that should occur after you fire the builder. You also want to make sure there is PLENTY of liability coverage in case someone should get hurt while on your property.

8) Print out copies of every email you have ever sent or received from your builder (along with every attachment) and put them all in a notebook then give the notebook(s) to your attorney for safe-keeping. If you should wind up in litigation, the courts will expect you to have kept all those documents and not having them could be held against you so save EVERYTHING.

Finally, be prepared for a long horrible slog through a legal and financial minefield. It is going to put more stress on your marriage than you would believe. So, make a pact with your spouse that regardless of what happens, the two of you will NEVER EVER EVER blame each other for the mess. Nobody who hasn't been thru this can possibly understand just how bad this can get. If you and your spouse cannot be totally supportive of one another, you very might be better off just letting the crook finish the house - as cheaply as you possibly can - then put it on the market and sell it as quickly as possible to cut your losses.

We fired our GC 3 years ago this month. We are only now finally reaching a settlement (still unsigned) with our builder that will result in him releasing the residual lien he holds against our house. We spent the remainder of our construction loan plus another 20% to get the house finished to a point where we could move in and we estimate that it will cost us another $30,000 to finish the things that still remain undone that were supposed to be part of the turn-key build. And we accumulated $20,000 worth of attorney bills. We have foundation problems that will cost about $18,000 to fix and SHOULD be covered by a 10 year statutory warranty from our builder but he has transferred all his assets to his family and declared bankruptcy so....

DH and I are still together and our lives are slowly getting back to normal but he is an absolute saint. I cannot imagine having survived the last three years without him at my side.

If you click on my "My Page" link you can email me off line if you want to know more.

    Bookmark   February 10, 2012 at 4:41PM
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bevangel, thank you so much for your thorough and heartfelt advice! I am so sorry to hear about what you went through. It is so stressful and unfair. I hope I can avoid some of these issues with dealing with our GC. thank you again, your info is worth its weight in gold!!

    Bookmark   February 10, 2012 at 6:22PM
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How much of the house is already built?

    Bookmark   February 10, 2012 at 7:28PM
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hi robin, pretty much all of the rough is done. so i am guessing 50% of house is built.

    Bookmark   February 10, 2012 at 11:38PM
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Bevangel gave some great advice so I'll just say that my heart goes out to you and god luck.
If you are considering this then it may be the wisest choice and the lesser of two evils.

    Bookmark   February 11, 2012 at 8:30AM
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hi everyone, we pulled the trigger and fired our GC last friday. one of his employees told us that the GC wants to sue us, but that his lawyer would not represent him saying he did not have any case. But the GC is looking for a new lawyer now.. we are hoping he will not take us to court and make us shell out more money for a legal battle. we already have lost so much money with him already. currently, he is playing some sort of game with us too and not picking up his equipment and tools from our jobsite... sigh...

we paid a structural engineer to look over his work and turns out that he has done a lot of shoddy work that we now need to fix. (he actually used wood beams where steel beams were required in our plans).

just a few things that i wish i had done earlier --
1. Wish i did not rely only on the city inspectors' signing off on the build. I was shocked to find that they approved his work despite so many issues (like the roof does not even look like the one in our plans, and the walls in one of our rooms is 1 foot too short!).
2. I wish I hired the engineer at each stage of the build. The fees are actually really reasonable, like only a couple hundred dollars.
3. I wish i purchased the builder's risk insurance at the beginning. I just purchased a policy now and it just gives me so much peace of mind! And again, the rates are really reasonable (less than insurance for a car).

Anyway, I hope this helps anybody in the future avoid the headache and mistakes we've made. The good news is we think we found an honest GC to come in to make everything right. thank you so much for all of the support and advice!!

    Bookmark   February 20, 2012 at 5:47PM
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If the GC did not follow the structural contract drawings, he would not only be in violation of the terms of his contract with you but he would probably be in violation of the building code as well.

The building inspector has no relevant role in this matter; believe it or not, he has no responsibility to you, the contractor, or the public for discovering non-code-compliant construction.

Document the field conditions carefully to insure that a new lawyer will not want to go forward either but be careful what you say to the GC or his lawyer; restrict any future contact to your lawyer. You are the damaged party so the GC would be foolish to put this in front of a court, but be sure to document current field conditions now, perhaps through the engineer or, in the case of building code violations, an architect. Look up his contractor license online; if it is not up to date he would have great difficulty using the courts even if he had a good case. Good luck.

    Bookmark   February 20, 2012 at 6:27PM
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Please know that you are in my thoughts and prayers. Having been there, I know that the weeks and months ahead of you are likely to be an emotional roller coaster...and a financial freefall.

There are likely to be times when you feel like no matter what you do, nothing ever seems to turn out quite the way you hoped and dreamed and planned...and that everything somehow always seems to cost more money than it was supposed to!

The best advice I can give you at this point is to be as kind to yourself as you possibly can be. Develop some sort of bedtime routine that lets you put the whole "house-building thing" out of your mind so you can get a least a few hours sleep each night before you wake up worrying again. Relax in the tub with a glass of wine or read poetry aloud in front of the fireplace with a hot cup of tea or do yoga or whatever will help you clear and settle your mind each evening.

And be even kinder to your spouse than you are to yourself! It is easy to take out our frustrations on those closest to us. If you find yourself starting to do so, try to remember that this is neither his fault nor your fault. You are in it together and need be able to LEAN on each other to survive.

I found this poem helpful...

Here is a link that might be useful: Most Like an Arch This Marriage

    Bookmark   February 20, 2012 at 7:49PM
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thanks Renovator8, your advice, as always, is priceless! we just went and filmed every corner of the house. Our footage plus the structural engineer's report plus all of the liens that we had to pay off should prove he is more than at fault. hopefully he will not cause trouble with a lawsuit..

bevangel, thank you for the moral support and for the lovely poem. it has been stressful for us but DH and I definitely feel we are on the same team, and we are not blaming anybody but the GC for these difficulties. btw, I think your name really suits you. you are truly an angel to me!

    Bookmark   February 21, 2012 at 1:10AM
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Very glad that you have freed yourself of that irresponsible contractor! We had a terrible experience once and only wished we had given up on our first hire sooner. Please let us know how things progress with your new one.

    Bookmark   February 22, 2012 at 10:51AM
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