T
TKT2RDE
Guest
What is the name of your state? Oklahoma
It will be difficult to sum this up without adding too much detail, but here goes nothing...
I signed a contract with the architect who designed my home. He had successfully contracted a few well-built homes and offered his services for less than what a seasoned contractor could offer. The contract was for him to act as a general contractor and build the home he designed for a fixed fee, and the payments were set out to be paid on specific dates over a 6 month period (the final payment due upon receipt of certificate of occupancy). The contract identifies him as the overall manager. Our agreement included him managing the funds thru a draw system with my bank.
Three months into the project, it became increasingly clear that he had no idea how to properly manage the financial end of a project. To make matters worse, communication efforts on his part began to deteriate to near non-existence. The bank has rules on draws that basically work on a system of: builder submits draw, bank inspector verifies the work outlined in the draw as actually complete, draw approved or partially approved, funds deposited into builder account. Pretty simple.
Six moths into the project, and due to extreme overages, mismanagement (i.e. paying accounts he didn't draw for with money intended for other accounts), no budget reconsiliation (leading to bounced checks), a questionable check written to a yet to be verified vendor, paying himself his final payment prematurely in violation of the contract, and lack of communication with myself and the bank... he managed to get himself in a situation where there was no money to draw based on what had been accomplished.
When I found this out, I offered to help him resolve the issue. We met and he provided his checkbook duplicates from which I created a ledger representing all payments made out of his account for the project. We also discussed the communication issues which he promised to resolve. I balanced the budget so to speak and found contingencies that the bank would allow us to draw upon. I created a draw request and submitted it to the bank. While it was being processed, I began trying to contact him about items that needed attention before I left on a trip. These items included discussing what to do with the $1684.00 balance left after the account was reconsiled, along with assessing what to do about the fact that he had paid himself in full before he was supposed to. It was basically more of the same as I could not reach him and he did not return any of my inquiries.
We had discussed the possibility of me taking over the finances as a result of the mess that he created. I really did not have time to take on this responsibility, and the consensus was that I was paying him to do it and so he should. However, after being faced again with not being able to reach him after having just discussed the issue... I decided that I should take over the finances. I called the bank, acquired the paperwork, and set up the dedicated bank account. I needed his signature to complete the process, but I couldn't reach him. I left messages indicating my decision. Time ran out before my sceduled trip and I had to leave town for three weeks. The bank contacted him directly to attempt getting the signature while I was gone.
When I returned, I had nasty e-mails from him dictating that his vendors had to be paid immediately before he would sign the paperwork (because of his mismanagement, the final payment for the lumber package, and the payment for the window package was outstanding). He basically indicated that the contingency draw request that I submitted to the bank needed to be put into his account, then we could talk. Of course, I chose not to do this and began seeking legal advice and talking to the bank about what to do. Later, I received a certified letter from him threatening liens and him filing a lawsuit against me, I paid a lawyer to respond with my decision to not follow his lead. He is still demanding that we pay his vendors, no liens have been filed.
The bank's position is that, since he won't sign the paper approving the funds going in to my account, they must have a lien release from him before I can continue on my own without him. He is refusing. On December 4th the project will hit the twelve month mark and I will be charged a $1000.00 penalty for exceeding the 12 months allowed, and another $2000 every three months afterwards. Work has not been done on my house since June. The roof is finished, and the exterior has been sheathed but not stucco'd... it is exposed to the elements. As of last month, he had not paid his vendors... I assume since it has been more than 4 months since the material was installed they have waived rights to file lien on my property and are instead pursuing him. I also assume that until he pays the accounts, and 4 months pass... my house is still subject to lien by him.
The bottom line is that he is essentially holding us hostage, but I am hesitant to immediately file a law suit for the following reasons only:
- I need more time to prepare and secure counsel.
- There is a binding arbitration clause in the contract, and even though he has threatened to file a law suit in the courts, he has not done so to date. I welcome litigation as I am very confident in the evidence that I have collected so far. I am concerned however that if I file, he may negate it somehow with the arbitration clause and I will have wasted more money. I am hesitant to pursue the arbitration because it seems overcomplicated and considerably expensive even though it is billed as the more simple and less expensive approach.
- He is working under his Architecture L.L.C. He is a one man operation, but signed the contract as manager of the L.L.C. My guess is that if I won judgment against his L.L.C., there are no assets in it and he would file bankruptcy. My hope is that because of the fraudulent behavior, I can find a way to legally pursue him personally and win judgment against him instead of his company.
My immediate goals:
- The lawyer I hired to send the letter and begin negotiations hinted that I might look for a more specialized attorney, so I need to find that someone soon.
- I need to find a remedy to the banks needs quickly so I can resume work on the house and complete it as soon as possible. The bank has agreed to allow me to contract the remainder of the home without hiring another general contractor. As I mentioned, however, they are requiring that my current contractor sign a lien waiver.
- I want to pursue the damages I listed above in order to negate the money owed to his vendors. Secondary to this, I want to pursue the damages I listed above in hopes of actually collecting the damages beyond the amount owed to his vendors.
Some thoughts I had concerning my goals:
- I read about "bonding" a lien. If I understand this correctly, the money is put up to release the lien's hold, but isn't immediately paid to the person filing the lien (until they win the award in the courts?). If this is true, perhaps I can negotiate a deal with the bank where I put the outstanding vendor balances in an escrow account to secure this bond in the event one is filed. In exchange, they allow me to continue on the home.
- Maybe there exists some way I can get this "situation" into the court without a full blown law suit, and ask that I be given the freedom to complete the home in order to assess final damages. (Which is true, I don't know what other problems there might be due to either he (or his subs) negligence and or the house being exposed to the elements for so long unfinished.
There are other details not provided here, but this post is already long. I will follow up with a post of actual damages I wish to claim. If you made it this far... I sincerely appreciate the time you have spent reading it and welcome any advice or information you are able to provide.
Thank You.
It will be difficult to sum this up without adding too much detail, but here goes nothing...
I signed a contract with the architect who designed my home. He had successfully contracted a few well-built homes and offered his services for less than what a seasoned contractor could offer. The contract was for him to act as a general contractor and build the home he designed for a fixed fee, and the payments were set out to be paid on specific dates over a 6 month period (the final payment due upon receipt of certificate of occupancy). The contract identifies him as the overall manager. Our agreement included him managing the funds thru a draw system with my bank.
Three months into the project, it became increasingly clear that he had no idea how to properly manage the financial end of a project. To make matters worse, communication efforts on his part began to deteriate to near non-existence. The bank has rules on draws that basically work on a system of: builder submits draw, bank inspector verifies the work outlined in the draw as actually complete, draw approved or partially approved, funds deposited into builder account. Pretty simple.
Six moths into the project, and due to extreme overages, mismanagement (i.e. paying accounts he didn't draw for with money intended for other accounts), no budget reconsiliation (leading to bounced checks), a questionable check written to a yet to be verified vendor, paying himself his final payment prematurely in violation of the contract, and lack of communication with myself and the bank... he managed to get himself in a situation where there was no money to draw based on what had been accomplished.
When I found this out, I offered to help him resolve the issue. We met and he provided his checkbook duplicates from which I created a ledger representing all payments made out of his account for the project. We also discussed the communication issues which he promised to resolve. I balanced the budget so to speak and found contingencies that the bank would allow us to draw upon. I created a draw request and submitted it to the bank. While it was being processed, I began trying to contact him about items that needed attention before I left on a trip. These items included discussing what to do with the $1684.00 balance left after the account was reconsiled, along with assessing what to do about the fact that he had paid himself in full before he was supposed to. It was basically more of the same as I could not reach him and he did not return any of my inquiries.
We had discussed the possibility of me taking over the finances as a result of the mess that he created. I really did not have time to take on this responsibility, and the consensus was that I was paying him to do it and so he should. However, after being faced again with not being able to reach him after having just discussed the issue... I decided that I should take over the finances. I called the bank, acquired the paperwork, and set up the dedicated bank account. I needed his signature to complete the process, but I couldn't reach him. I left messages indicating my decision. Time ran out before my sceduled trip and I had to leave town for three weeks. The bank contacted him directly to attempt getting the signature while I was gone.
When I returned, I had nasty e-mails from him dictating that his vendors had to be paid immediately before he would sign the paperwork (because of his mismanagement, the final payment for the lumber package, and the payment for the window package was outstanding). He basically indicated that the contingency draw request that I submitted to the bank needed to be put into his account, then we could talk. Of course, I chose not to do this and began seeking legal advice and talking to the bank about what to do. Later, I received a certified letter from him threatening liens and him filing a lawsuit against me, I paid a lawyer to respond with my decision to not follow his lead. He is still demanding that we pay his vendors, no liens have been filed.
The bank's position is that, since he won't sign the paper approving the funds going in to my account, they must have a lien release from him before I can continue on my own without him. He is refusing. On December 4th the project will hit the twelve month mark and I will be charged a $1000.00 penalty for exceeding the 12 months allowed, and another $2000 every three months afterwards. Work has not been done on my house since June. The roof is finished, and the exterior has been sheathed but not stucco'd... it is exposed to the elements. As of last month, he had not paid his vendors... I assume since it has been more than 4 months since the material was installed they have waived rights to file lien on my property and are instead pursuing him. I also assume that until he pays the accounts, and 4 months pass... my house is still subject to lien by him.
The bottom line is that he is essentially holding us hostage, but I am hesitant to immediately file a law suit for the following reasons only:
- I need more time to prepare and secure counsel.
- There is a binding arbitration clause in the contract, and even though he has threatened to file a law suit in the courts, he has not done so to date. I welcome litigation as I am very confident in the evidence that I have collected so far. I am concerned however that if I file, he may negate it somehow with the arbitration clause and I will have wasted more money. I am hesitant to pursue the arbitration because it seems overcomplicated and considerably expensive even though it is billed as the more simple and less expensive approach.
- He is working under his Architecture L.L.C. He is a one man operation, but signed the contract as manager of the L.L.C. My guess is that if I won judgment against his L.L.C., there are no assets in it and he would file bankruptcy. My hope is that because of the fraudulent behavior, I can find a way to legally pursue him personally and win judgment against him instead of his company.
My immediate goals:
- The lawyer I hired to send the letter and begin negotiations hinted that I might look for a more specialized attorney, so I need to find that someone soon.
- I need to find a remedy to the banks needs quickly so I can resume work on the house and complete it as soon as possible. The bank has agreed to allow me to contract the remainder of the home without hiring another general contractor. As I mentioned, however, they are requiring that my current contractor sign a lien waiver.
- I want to pursue the damages I listed above in order to negate the money owed to his vendors. Secondary to this, I want to pursue the damages I listed above in hopes of actually collecting the damages beyond the amount owed to his vendors.
Some thoughts I had concerning my goals:
- I read about "bonding" a lien. If I understand this correctly, the money is put up to release the lien's hold, but isn't immediately paid to the person filing the lien (until they win the award in the courts?). If this is true, perhaps I can negotiate a deal with the bank where I put the outstanding vendor balances in an escrow account to secure this bond in the event one is filed. In exchange, they allow me to continue on the home.
- Maybe there exists some way I can get this "situation" into the court without a full blown law suit, and ask that I be given the freedom to complete the home in order to assess final damages. (Which is true, I don't know what other problems there might be due to either he (or his subs) negligence and or the house being exposed to the elements for so long unfinished.
There are other details not provided here, but this post is already long. I will follow up with a post of actual damages I wish to claim. If you made it this far... I sincerely appreciate the time you have spent reading it and welcome any advice or information you are able to provide.
Thank You.
Last edited: