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help understanding contractors contracts

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Junior Member
What is the name of your state (only U.S. law)? Iowa

I purchased a house with a loan through USDA that included escrow money to hire contractors to fix this foreclosure home up to be liveable. The contractor provided me an estimate & I explained I didnt know if everything on my wish list would be done becuase the money was in escrow and when it was gone it was gone.

USDA had the contractors (3 total for the home) and myself sign USDA's standard forms regarding work and payment. USDA made many violations to this contract as well as the last contractor and I am left with crappy work that they havent fixed (over 60 days), they were paid in full against the contracts agreement and are trying to bill me another $2300+.

The USDA lady wont deal with the contractors and says it is my job to work things out with them and the contractors say they dont have to provide me any proof or receipts or anything because its a government job. The contract says all changes were to be done in writing which never happened and I was to approve all work and USDA inspect before final payment (40 %) paid to them. They were paid half the money a week into the job and another 1/4 3 weeks later.

They say it is a bid contract and I dont understand what that means or what rules apply. The paperwork from them all says estimate. i cant find anything on the internet about bid contracts. Can someone please help me between my sons major medical and mine and this house I dont have two nickels to rub together to hire a lawyer.


Senior Member
They say it is a bid contract and I dont understand what that means or what rules apply
very simply put; a bid contract is where some specific work is listed and a contractor bids (offers) to do the work for a set amount. The lowest bid, if there is more than one bidder, typically is awarded the work.

who controlled the escrow account and did you have to sign to allow the escrow controller to make payments to the contractors?


aside from the fact that its a bid contract, first you must know your monetary damages, this will determine whether you can sue in Small Claims in your state or if you must sue in either Justice or Superior Court. Small Claims is less formal, but in Justice and Superior there are more regulations and such.

Before you can even begin to file suit, you must understand which Court has personal and subject matter jurisdiction over your case. To do this you must figure out how much your monetary damages are, in other words what are you suing for?

What are your actual damages? Understand that just because a contractor did not do work the way you wanted it done does not amount to damages. A judge will not unjustly enrich you. This means that if the contractor did work, which had to of cost him money, and then because your not happy with his work you sue, the judge will not wipe the slate clean...this would not be fair to the contractor. If you paid another contractor to finish the work that the one your trying to sue didn't complete, that would amount to damages, but from your post it seems like you did not do this.

In the state of Iowa the maximum amount you can sue for in Small Claims is $5000.00, After you determine what you feel is due and owing to you, the merits of your case can be discussed. Also you state that they are trying to bill you another $2300+ , is this for work that they have already completed or for work they are intending to do.


Junior Member
more info

The escrow funds were held in an account by the lawyer USDA chose to handle the legal work for the house. The USDA lady authorized the payments to the lawyer. I did not sign or authorize any of the payments and in fact didnt even know about the payment of $8,000 that was made to them a week into the job ntil one of the contractors told me. All of the others contractors were not paid until work was complete and billed out.


Junior Member
contract details

The contract the contractors & I signed with USDA was the only contract signed and it stated they were to receive a partial payment not to exceed 60% of the value of work in place. They started in July and it still is not done yet. It also stated upon completion of the whole contract and acceptance of the work as required hereunder, by the owner and the FHA and compliance by the contractor with all terms and conditions of this contract, the amount due the contractor will be paid.

They were paid in full long before the job was even done which was the doing of the USDA lady. She just came out for her inspection last week and I showed her all the problems and things I have had to have someone else fix. I bought this house alone as a single mother and am not what you would call handy or able to make repairs. I told her by her paying them in full I have nothing to hold over their heads to ensure this gets done and done right. I showed her unaceptable work and she couldnt believe how bad some of it was. They used unfinished pine wood in the bathroom next to the shower, the countertop over the bar area they installed is sagging because they didnt brace it, they installed unfinihsed fiberglass entry doors, the custom kitchen shelves they built are crooked on 3 sides, the sink was not installed correctly and came apart while the dishwaher and & were in use flooding the new laminate floor and basement etc. We had to do so much work on this house due to the mold and my severe asthma.

It also states in the contract that any additions or subtractions to work was to be done in writing in a change order which they never did and they are just swapping things and calling them even in their head but wont put it on paper and justify it. They have double billed me multiple times which I have shown her through their paperwork as well as billed me over $617.00 for 2 windows and install that they did not do here at my house.

They wont explain anything to me they say they only have to report to the USDA lady since it is a government job and that since it is a bid job they dont have to provide me any receipts or proof of labor hours etc. They have provided me a print out of costs for the doors and windows to submit to the electric company for their rebate as well as a general spreadsheet listing costs of materials and total lump sum amount of labor hours. They are now telling me they lost over 4 grand on the job and that is why they are billing more money. I was never told there was going to be additional costs until they were out of here and one of the guys showed up and left a bill with another worker for me (I didnt live on site which they knew).

The USDA lady I think realizes she screwed up and has set up a time with them for Dec 4th to come make the repairs and she will be here to supervise due to high tension. I have been trying to deal with her for over a month now and getting no where but angry because she wouldnt come out and look at it and see what I was dealing with.


Junior Member

In a bid contract, does it state they dont have to provide receipts & labor break down? Does it also have any laws on the work that is eliminated or added like showing credits and additional work costs. Can they show up after the fact and say I owe 2300+ when they didnt tell me that before hand?

What do I do about them billing me for work they didnt do or trying to bill me again for work that was included in the $17,002.50?

The USDA lady is wanting to just wash the extra bill and call it even instead of making them show where they eliminated work such as the 4 curved archways which I have no idea how much that should have taken off the bill for them squaring them up which they told us was easier and cheaper or them not needing a backhoe for the egress window because we paid for one with the plumber and the backhoe guy left the hole open for these contractors etc. I have a feeling they would end up oweing me money.

As for damages I have costs for someone to fix these things as well as not being able to move in as soon as I should have which cost me more money. I had to have some of the things done so I could get moved in. The contractors left the job site the very beginging of Sept in fact only 1 of the 3 guys putting in a few hours to finish up things the first few days of Sept. He was here in Oct. to see problems & it will be Dec before anything is fixed by them. I have daylight comeing in the roof as well as bugs & rain, a window that leaks, unfinished wood & doors, sink that could come apart again anytime because the pipe is too long and doesnt sit in there right, drywall cut too short in a lot of rooms, they left knock down texture all over woodwork and floors which I had to get someone to scrape down before carpet and laminate could be layed etc.


Senior Member
In a bid contract, does it state they dont have to provide receipts & labor break down?
Not generally. A contractor applies for what is called a "draw" after a predetermined % of work is completed. There is no labor or material breakdown required unless it is in the contract.

I know you do not want to hear this but you really need a lawyer in this situation. The contract you signed is extrememly important in this situation and nobody is going to read it and provide an opion over the internet.

First, if the contract states you are required to sign off on any payments made from escrow, you have a complaint againg whomever authorized the payments without your signature. With what the contractors have been telling you, it seems that they may be contracted to the USDA rather than you and as such, it is the USDA's reponsibility to ensure the work is proper. If this is true, you do not have a claim against the contractors but, again, against USDA. It would appear USDA would have claims against the contractors as well.

This is simply to complex to deal with on an internet forum. You really need an attorney to help you with this.

I would call the state bar and ask for any pro-bono firms in your area or firms that assist low income people. If you have a law school in your area, they often offer assistance as well.

It would be great if a particlular poster that frequents this forum (Homeguru) would see this and comment. He has been around. Maybe he will pick up on this.

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