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Family contractor- no contract- poor invoice

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What is the name of your state? Michigan

My husband and his two siblings inherited their fathers home. It was agreed upon that they would paint the inside and sell it and split the profits equally.

Then two weeks later, my husband and one of the siblings found out that the other sibling and her husband (who is a builder and real estate agent) gutted the home and had plans to do a total renovation inside. Obviously the two siblings were upset and angry but decided that there wasn’t much that could be done at this point since the house was already gutted. They reluctantly agreed to move forward with renovations. Provided they were kept in touch with the details, decisions and were provided with information on budget and such. (Prior to the gut job, the husband realtor, provided a CMA stating that if $30k was put into the house then it would sell faster and for a higher price. None of the siblings agreed to renovate at that point. )

Fast forward two and a half months later and several attempts via phone, text, and email no written contract or agreement was ever created between the builder/agent husband and the three siblings, however the wife was involved with the renovations. The two other siblings have asked for invoices and information on costs repeatedly. With nothing provided.

Now that the house is ready to be listed, a sloppy (and I mean very disorganized) invoice was provided for the amount of $66k. The type of entries in the invoice are “materials from Lowe’s” and “charged on personal credit card at Lowe’s”. There is no breakdown as to how much was paid for flooring/title/cabinets etc... there are also extremely high sub-contractor fees to vendors such as “mike’s painting” for $7,200 (mind you there were three entries for Sherwin Williams for $4k) and even a $10k entry for another contractor that I can’t find any information on the web.

When the two siblings asked for a better breakdown as to what was on the invoice, the husband/builder/realtor and the sibling/wife got all angry and started yelling then hung up (we live in Florida and they are in Michigan where the house is located)

The two siblings are not tying to avoid paying the amount that is owed for what was actually done on the house. They understand they should have stood their ground better in the beginning but what are their legal obligations to pay the $66k? Again there were no discussions or paper on what the Reno would cost. The two siblings were expecting close to the $30k maybe even as high as $45k. Not $66k and especially not provided the horrible invoice that doesn’t list any descriptions or scope of work. There are also duplicate entries for the same amount from Lowe’s on the same day.

Does he have to provide a better invoice? I read that since there is no written contract that he can’t file a lien on the house. And since the only number mentioned in writing was the $30k does that show all they are legally obligated to pay?

It’s a very sad situation and unfortunately hurting the family so closing this situation out sooner rather than later is best.
 


not2cleverRed

Obvious Observer
The house is with probably worth between $345-$385k. Prior to the renovations it was probably around $330-$365k.
Is this your guesstimate, or has it been professionally appraised (by someone not connected to the brother-in-law)?

Spending $66K to increase the value less than $65K seems to be a poor investment - especially since, had it been on the market during that time, it might have sold already: in most parts of Michigan, the data would suggest that the best time to sell a house is late spring to summer. And, as it's been unoccupied, there has been the added expense of property taxes.

I'd be inclined to say pay for the renovation out of the proceeds of the sale, and split the remainder 3 ways.
 
That is the guesstimate. The husband and sister don’t feel it’s necessary to get an appraisal. (I’m a realtor in Florida and anything I’ve said or suggested has been dismissed by them).

I couldn’t agree more with you that it was a poor investment. Extremely poor. And yes the timing is not good either.

The intention was to pay him out of the proceeds then split. But again, how much?

Shouldn’t he have some legal responsibility to provide an accurate invoice or bills, receipts for what was done. How do we know he’s not charging other projects materials to this house? Needless to say he is a bit shady and is why my husband and the other sister didn’t want him involved. Especially since there is no written contract.

Putting family aside, any client is going to question the invoice that was sent. Especially with duplicate entries and vague inputs like “materials from Lowe’s” which by the way totaled to just under $10k.
 

LdiJ

Senior Member
That is the guesstimate. The husband and sister don’t feel it’s necessary to get an appraisal. (I’m a realtor in Florida and anything I’ve said or suggested has been dismissed by them).

I couldn’t agree more with you that it was a poor investment. Extremely poor. And yes the timing is not good either.

The intention was to pay him out of the proceeds then split. But again, how much?

Shouldn’t he have some legal responsibility to provide an accurate invoice or bills, receipts for what was done. How do we know he’s not charging other projects materials to this house? Needless to say he is a bit shady and is why my husband and the other sister didn’t want him involved. Especially since there is no written contract.

Putting family aside, any client is going to question the invoice that was sent. Especially with duplicate entries and vague inputs like “materials from Lowe’s” which by the way totaled to just under $10k.
Here is the problem. His wife can hold up the sale of the house indefinitely. All she has to do is refuse to sign a listing agreement. If you are then forced to go to court for a partition sale, not only will you have to wait to sell, but you will also get significantly less than full market value. (think auctioned on the courthouse steps) plus all of the costs of the suit.

Is it right what they did? Absolutely not. Is it right that they are not providing better documentation? Not its not. However in the end, its likely going to be cheaper to just bit the bullet and get the house sold.
 
great point. Actually my husband and the other sibling aren’t trying to make a lot off the sale. They just want things to be handle fairly. While it would suck, they would be fine with it being handled by a third legal party, regardless of the price it is sold for.

Speaking of listing agreement....you guessed it. The husband who originally said he wasn’t going to profit from the sale is the selling agent and is wanting a full 3% commission on it. The wife also told the other two siblings several times that the husband wasn’t going to take a commission (he owns his own brokerage so he is able to not take a commission or at the very least only take 1%).

The two siblings refuse to sign the listing agreement without getting proper invoice and him reducing the commission.

What a cluster!!!!!
 

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