Dealing with lein holder after fire

[bigearl67]

Two months ago I had a fire that destroyed my roof and some other structural damage, including my son’s bed room. The insurance company sent a two party check in my name and the lien holder’s. The lein holder, (mortgage company) as their policy, wants to issue 20% of the funds to me until I have over 50% of the restoration work complete. The price of the new roof is over 50% of the cost (materials alone) and while I have a contractor that is more than willing to work with me on this, he is getting impatient and fed up as am I. I have explained this to them but “it’s their policy” is the only response I get in return. To make matters worse, they want to go with 20% distributions until the work is complete and the time frames are real time plus two weeks for each transaction.
I have explained to them (and they have the bill of materials and contractors quote) that a custom roof can not be bought and installed 20% at a time but again, it falls on deft ears.
Three times now my son’s asthma skyrocketed with the additional agitation of living in the smoked house. Yesterday I had to carry him out and put him in my vehicle until the cool air conditioning brought him back to normal.
I’m really getting tired to dealing with these people. Can anyone offer me any advice? Thanks for reading, Earl.

 

[Mass_Shyster]

I have a contractor that is more than willing to work with me on this

Is doesn't really sound as if your contractor is really willing to work with you on this. I'd look around for other contractors willing to accept the payment terms dictated by the lienholder.

 

[OHRoadwarrior]

There are contractors who regularly do insurance repair work. If the contractor is not paid, they may put a lien on the property. If the contractor is paid and does not do the work, the lender must chase them. I suggest getting a better contractor. All materials must not be purchased upfront to do a job.

 

[bigearl67]

Thanks for the replies. I understand some of the issues with the contractor. The roof is a steel roof and needs to be custom ordered, paid up front. He is willing to do the rest of the work without payment up front but price of the roof is over $5000, that’s for just the metal, fasteners and trim. Also please understand, the process was started over two months ago and the lien holder is just now going thru the initial part of the process. All licenses, insurance adjuster paperwork and quotes have been submitted to the lien holder well over 6 weeks ago. Is it “normal” for a contractor to put up this kind on cash with an expected return of several months after the work is done? Earl.

 

[nextwife]

Contractors who do insurance work would normally get "terms" from their suppliers that enable them to pay within 30 or 60s, rather than upfront.

 

[justalayman]

. Is it “normal” for a contractor to put up this kind on cash with an expected return of several months after the work is done? Earl.

Normal? Yep.

Payment up front is something small contractors do because they cannot afford to finance the jobs they take on. If you were to see large commercial industrial work, you would realize how backwards a pay in advance system is. Why should a customer pay for something that is not done and not theirs? They shouldn't.

In fact, when you get into large projects, it is not uncommon to require the contractor purchase a performance bond just in case they decide to walk away in the middle of the project.




The other huge benefit of not having a customer pay for materials up front: there is a Hell of an incentive for the contractor to get the job done because they do have material financed, either through simple purchases out of their pocket or possibly financed from a bank or other money source or the material supplier where they are paying interest. They don't tend to let a job set around, or even worse, walk away altogether, because they have a financial investment in that work.


While I don't have a huge problem with some deposit up front, expecting the entire pile of materials being paid for is not the best way to go.



btw: when you get this finished, do not make a final payment until the contractor signs an indemnification contract stating that all suppliers and subcontractors have been paid and the contractor will indemnify you if you get a surprise when they aren't. And that the contractor is releasing all claims to a lien as well.