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contractor's license question

hokies
12 years ago

What happens when you hire a class C licensed contractor (max. $7500 per project) but your signed project amount exceeds that maximum amount? is the contract still binding?

Comments (12)

  • aidan_m
    12 years ago

    You are part of the contract. Hold up your end of the deal. Contract law has many clauses. Each state has its own laws governing contractor's licenses.

    If your contractor violates a clause of the local contracting laws, that is for the state license board to enforce. If you signed a proposal, contract, change order, for $10K of work, you are obligated to pay. If the work is not to contract, not to code (as per contract) or deficent, or there is a misrepresentation of the contractor's credentials, you can try to hold up payment.

    Is the work satisfactory? Is it per contract? You already know the guy has a certain kind of license, did he misrepresent himself as another type of contractor?

    The state license board could issue the contractor a citation for overstepping his license. Not paying the contractor will probably backfire in the end. You will have to pay. If you wait until the job is finished and then refuse to pay, and the job is per contract, you will lose the suit.

    If you call the license board on the guy, he will stop work, pay the fine, and stick you with the bill for $7,500. You will have to get another contractor to finish.

    If there is bad work going on, stop the work yourself. Send the guy away, telling him that you understand his license does not cover this size of a project. Tell him the work is substandard, not to code or whatever is wrong with the work, and that his license, insurance, bond, etc. will not cover the deficencies. Therefore you want to cancel the contract and not report him to the license board.

  • hokies
    Original Author
    12 years ago

    I am one of those homeowners who didn't thoroughly checked out every thing before signing the contract. I feel stupid and helpless as it is my fault to go with the lowest bid. It is an expensive lesson learned for me as I put down 25% deposit (10K) and the contractor showed up a month late and no materials. He worked for a few days and disappeared. None of my phone calls were returned. After a few days of no show, I sent him an email threatened to file a complaint. He responded with some bogus excuses. Is this enough ground to terminate the contract?

  • john_hyatt
    12 years ago

    25% was $10,000 ?????

    Hokie, I have to figure your money is some what more slighted than your thinking compound. I am sure you got a Contract signed as it seems but a filed complaint is the least of the action I would recomend.

    Sounds total Hokie to me. JonMon

    J.

  • aidan_m
    12 years ago

    The person stole your money.

    Don't ever pay for anything until recieved. 25% down payment? Run! Any legit contractor has credit.

    Large projects may take a long time to complete. That can put a strain on cashflow and run up the interest on the credit accounts, so therefore contractors may need money before the job is finished. That is OK. In contracting, these are called "progress payments" and they must be bound to predetermined milestones of the project.

    For example, it is OK for a contractor to ask for a progress payment of 25% when the materials are delivered to the site. Another 25% when the framing passes inspection. And the final 50% when the final inspection passes.

  • hokies
    Original Author
    12 years ago

    Thank you aidan_m. I wish I could go back and undone everything. I was blinded that I found a low bid that met my budget and was not careful enough to check out references and the license issue. I did, however, went to the site that he was working on to check out his work and it looked good. I later found out that he ran away from that site as well after he took money from me. My mistake, I will have to live with for a long time as 10K is not chump change. I worked very hard to save money for the project after putting my kids through college.

    I hope other people will read this and learn from my terrible experience.

  • marcinde
    12 years ago

    aidan - "Don't ever pay for anything until recieved. 25% down payment? Run! Any legit contractor has credit." Are you on drugs? It is not the contractor's responsibility to finance YOUR project. It also shows a commitment on the part of the client. Check your state contractor law. Every state allows a specific percentage of the total project amount to be collected as a deposit or down payment on a job. My clients can be excited, earnest, singing my praises, and friending me on Facebook - they don't get put on the schedule till I get a deposit. Worried that the contractor you selected will take the money and run? Then you probably did a lousy job of screening the contractor and/or picked the lowest price. That's the risk you take.

    Hokies - that really, really sucks. Your remedy is to pursue the contractor in court and report him to the state contractors board. If he's this big a scrub their sanctions probably won't mean a lot to him and he'll close his doors and pop up with a new name next month, but maybe you're setting a track record for the next homeowner to see. I really hope you're successful in getting your money back. Mopes like this guy are what give our industry a bad name (and make people think ridiculous things like they shouldn't pay a deposit)

  • john_hyatt
    12 years ago

    Hmmmmm your right Marci to a point.However $10,000 down on a $40,000 project is not the normal.

    No matter how much money a person has that is a lot. On a project that big I would get around $1,000 on the day the contract was signed with a draw pattern very close to what Aidan stated.

    It would have to be a $ 100,000 job to get that much down and be good business.

    J.

  • aidan_m
    12 years ago

    The law around here:

    In California, the state limits advance payment at the time of contract signing to 10% of the total estimated job cost or $1,000, whichever amount is lower! All payments thereafter are supposed to be made for work performed or for materials delivered to the job site. What this means is that the contractor is required to have good credit sufficient to buy materials and hire subcontractors. Not just in California, but in any state, if you agree to pay a contractor everything up front, you've made a major mistake.

    Um, yeah. I am on drugs. See where I'm from?

  • marcinde
    12 years ago

    Hm, I thought that was a stereotype. Clearly if we have a get-together, Aidan brings the brownies.

    In most states, the max deposit you can request is 30%, which would fit with what the OP put down. One of the deck guys I know here is 25% at signing, 25% on day 1, and 25% at successful framing inspection. I'm not cool with that, but it's an extreme example of what the law will allow.

    I follow several industry consultants in both landscape and building, and they all bang the drum of not financing your clients' projects. The client should hold enough for leverage, certainly, but not 100% until completion (unless it's a tiny job, and even then...)

    I also think it's important that the client have some skin in the game to stay committed. Nothing sucks more than having a signed contract but no deposit, buying the materials to start the job, and getting a call the night before that they're backing out of the contract because they found someone cheaper.

  • hokies
    Original Author
    12 years ago

    In my state, 25 % to 30% is normal as stated on the Dept of Professional and Occupational Regulations (DPOR). Of all the other contractors who came to bid, most of them wanted 25% down, 25% first day on job, 25% half way, and remaining 25% after completion. So when this guy asked for 25% down, it didn't raise a red flag at all. I am sure there are many good and honest contractors out there. I was stupid and got fooled by a very bad person due to my lack of judgement and put forth too much trust on this person...a costly mistake.

  • brickeyee
    12 years ago

    "It is not the contractor's responsibility to finance YOUR project."

    It is to the extent of materials and labor for the project.

    Do you pay 100% up front before any work is performed?

  • www.thedeckbarn
    12 years ago

    we get $500-$1,000 down and the balance when the job is done
    steve scholl