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Thread: Getting Stiffed

  1. #1
    Tom Waier Guest

    Default Getting Stiffed

    Any advice? My brother-in-law is employed as a commercial carpenter. He took a "side-job" building someone a pole barn - approximately $12,000. There was no written contract, but the owner reviewed the estimates for labor and materials and verbally agreed to the fee. He paid half in progress payments. You now where this is going... He now refused to pay the final bill for $5700. He is satisfied with the barn, but simply refuses to pay. He gets free legal service through his job. A further complication is that my brother-in-law is not a licensed contrator. In summary, no license and no contract, has anyone been through this type of mess? Does he have any recourse? Appreciate any help.

  2. #2
    James Eggert Guest

    Default Re: Getting Stiffed

    It appears that the homeowner was the contractor then and hired people to erect this barn? Gee, who took out the permit? Maybe not necessary where you are, but who did any of the other work that may be of interest to local authorities or the homeowner's insurance company; and how about a paper trail of any correspondence between parties. I would think that people know who did the work besides the homeowner. How many bells and whistles do you think will go off when a W/C claim for a lingering backache is filed and he thought he was working for the homeowner as a covered sub?
    There are many ways to play the game when you are right; I suggest he contacts a lawyer and springs for an "Introduction Letter". If the small claims limit is maybe $3000 that's another route.
    Of course, everyone needs some form of a contract, no matter how simple you need some documentation of intent and scope.

    Jim

  3. #3
    Barry Novick Guest

    Default Re: Getting Stiffed

    The best jobs I have ever had invovled no contract, just a hand shake. If the client never intended to pay in full, a contract would not matter, they would make you sue them. Courts hate builders. (stike one). The courts hold the contract against the person who writes it if any ambiguities (sp), usually the builder (stike two). Here in michigan, you must have a license on any job over $600, and you can not sue if you do unlicensed work even if you are right, you have no "standing" in the eyes of the court (stike three).

    Barry

  4. #4
    Patty Shea Guest

    Default Re: Getting Stiffed

    Tom,

    I agree with James when he says that the homeowner acted as the contractor. I would find out by calling the local building department to see if the homeowner pulled a building permit. If not, I'd turn him in. In Michigan a carpenter does not have to be licensed if he is doing work for a licensed builder or a homeowner who pulls his own permit. It is perfectly legal here. We also have a Construction Lien Law that allows a subcontractor to lien a property if he has not been paid for his work. It's called a "Mechanic's Lien" and is just for such cases. It's amazing how a homeowner responds to a lien notice on his property that becomes a part of his title work and is a matter of public record.

    There are a couple of hoops to jump through, such as filing a notice of furnishing within 90 days, (I think), in order to be able to file the lien. It's worth a call to a lawyer. Call the local building association to find a lawyer who specializes in construction.

    Not having a written contract may make it more difficult, but verbal contracts are enforcable. Hopefully he has a copy of his estimate and scope of work to back up his claim. Was there a witness to the verbal contract?

    I wouldn't walk away just yet.

    Barry, I would never do a job without a written contract. I'm all for handshakes at cocktail parties, but when it comes to money I want to make sure that what I say is what they hear. And that we are on the same page.

    Patty

  5. #5
    Dick Seibert Guest

    Default Re: Getting Stiffed

    Tom:

    What state are you in? In California, he would not only not be able to collect if he took him to court, but the owner could cross-complain against your brother-in-law and he could get the money back that he paid him, and your brother-in-law could be looking at some serious criminal penalties for contracting without a license.

  6. #6
    Patty Shea Guest

    Default Re: Getting Stiffed

    Dick,

    Do carpenters in California need to be licensed? In Michigan, only General Contractors need to be licensed. If the brother-in-law acted as a GC without working under a permit, he would be in a minimum of trouble around here. Actually nothing would ever happen to him beyond a civil suit for the money paid out for work that was never done, if the homeowner goes that far. They are never collectable so that rarely happens. Any work that had actually been done, the trade would win in court.

    This is a real problem for builders in my area. Homeowners can pull their own permits and hire anyone they wish. They think they are saving a lot of money by hiring non-professional builders who are unlicensed. We loose a lot of jobs to carpenters who claim to be able to do the whole job, under-bid them exponentially, have the homeowner pull the permit and it's completely legal. Then they can't pull it off and they give the entire industry a bad name. No one goes to jail, no one gets in trouble and real builders get the reputation of being dishonest and incapable.

    At our local Builders Association meetings there is a huge swell of legitmate builders constantly talking about turning in the non-licensed builders that are taking our jobs away from us. If the local building departments are notified of a job that does not have a permit, the worst thing that can happen is that the job is stopped until the homeowner applies for a permit and pays the fee.

    Unlicensed trades are protected by our Lien laws.

    In 20 years I have never even heard a third-hand report of anyone being punished in any way for working without a license. It's an issue that we talk about on a regular basis.

    How does it work in California?

    Patty

  7. #7
    Kraig Guest

    Default Re: Getting Stiffed

    I thought this forum's purpose was to allow communication regarding LEGITIMATE problems & questions relating to "Markup & Profit".

    How does "no license, no contract, and no permit", (i.e. unprofessional and possibly illegal practices) become a part of this forum (assuming it was designed for professional, licensed/registered, law-abiding parties)?

    Don't think I am this forum's gatekeeper...far from it. But I tire quickly of hearing this same old story..."I didn't have a contract and I'm not licensed, and I didn't pull a permit, and now the bad homeowner won't pay...now I need professional help".

    My advice: Tell your brother-in-law to become a professional and act like one. No sympathy to be found here.

    Kraig

  8. #8
    Frank Gale Guest

    Default Re: Getting Stiffed

    Patty;

    As a CA GC, let me answer for Dick. All contractors must be licensed here, including the sub-trades. One can work a job up to $500, labor and material included, without a license or contract. Anything over that amount requires both the license and a writen contract. Also, unless all contractors on a remodel are Home Improvement Certified by the Contractors Board, they are considered "not duly licensed", and thus loose their standing in court when perfecting a lien. There are other laws we have to comply with regarding down payments, content of the contract, etc., and T&M/C+ contracts are illegal. Does that answer your questions about CA?

    Frank

  9. #9
    Patty Shea Guest

    Default Re: Getting Stiffed

    Frank,

    It does answer my question. Thank you. That is NOT the case in Michigan. In Michigan we can hire dog-cathcers and call them carpenters as long as we, the GC's are licensed and insured.

    Patty

  10. #10
    Dick Seibert Guest

    Default Re: Getting Stiffed

    Patty:

    Frank is 100% right; however, people in California can hire dog-catchers and call them carpenters as long as they pay them by the hour, but the minute they get a fixed price ($500 or over) they must be licensed as contractors.

  11. #11
    Sonny Lykos Guest

    Default Re: Getting Stiffed

    Kraig is right. Michael has already asked us once already to stick to threads about this particular forum's title.

  12. #12
    DR Guest

    Default Re: Getting Stiffed

    Kraig: Have you ever been stiffed? If you have you have you would not feel the way you do. Just something to think about.

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