Can general contractor raise price after house is finished?

[HappyHumanist]

Our house (in Wisconsin) is finished. According to the bid we accepted, we owe one final payment of $60,000 ($53,000 plus $7,000 to account for change requests during the construction process) to our general contractor. Now, right at the end, he suddenly says we owe him $73,000. He says if we don't pay it, he's going to sue us. Can he doe this to us? Here are his reasons:

1. His estimates were inaccurate, and some of his sources for material and labor ended up charging him more than he expected.

1. We bothered him with a lot of changes and supervision.

2. Our house is worth a lot more than we're paying him.

1. The house too him longer to build than he expected, and so he had to pay a lot more for labor than he expected.

Here are my answers to him on each of the four issues:

1. Regarding his costs exceeding his estimates... We had an oral agreement in the beginning that once we agreed on a project and accepted his bid that the bid would not change--up or down. If we made changes (we did make minor changes), we would be responsible for our changes. If market prices on materials were to fall, we agreed that he would enjoy the savings, but if prices went up, he would suffer the extra charges. He called this "locking in," and that is one of the main reasons we went with this contractor. On the detailed written bid he provided us, and which we subsequently accepted, he even wrote his "lock in" promise at the bottom--a few sentences. Other than these written documents and or oral contract, we have no official contract with him.

1. Regarding his claim that we bothered him with changes and supervision... He never once discouraged this or said that there would be extra charges, other than the cost of the actual changes, which we are agreeing to pay--,000 for specific changes bringing the total due up to ,000. But he wants ,000! As for his claim that we bothered him with a lot of supervision and faxed notes... He never discouraged this, and the only reason for the close supervision and notes was because his crew made a *LOT* of mistakes that had to be corrected. The work was very substandard. All of this is documented. I think our supervision and notes actually helped them get through the job and finish it the way we intended it to be finished. They were very unprofessional.

2. Regarding his claim that our house is worth a lot so we should pay a lot... Why should we be penalized because we came up with a great design and made wise choices for materials and features? He offered us a bid in the beginning, and we accepted. Now, because the house is very attractive (mostly because of the land and neighborhood), why should he be entitled to more money? His complaint is that he didn't charge enough initially, and now he's going to lose at least ,0000, and that we should have to pay for his losses because our house only cost us 0,000 and it's worth about 0,000. First of all, I think it's worth 0,000 at the most, and even if it was worth 0,000, that would be like a mechanic complaining because he sold us an engine for ,000 and we put it in a car we bought for ,000, and now that car is now worth ,000--too bad, right?

1. Regarding his claim that the house took longer to build than expected... Isn't that his fault? The reason it took longer is because his crew are slow, lazy, and inept. They made a lot of mistakes that they had to fix. Likewise, everything based on time cost about double--the dumpster, the crane, etc. In fact, this actually cost us money, because we paid four months longer than expected on our construction loan without being able to live in the house--shouldn't we be entitled for some compensation for that?

This is all causing us a lot of stress, and it sounds like it's going to cost us a lot of legal fees now, too. I feel violated. What can we do? Please advise. Any helpful information would be greatly appreciated.

Thanks, Unhappy

[Tony]

Just pay what you agreed to pay, he'll go away. he's not going to file a lien.

when are you going to pay him? will it be in cash? what address will you be delivering this 60,000.00 to? time and date too

thanks

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[HappyHumanist]

And what if he doesn't go away? What if he sues us like he said he's going to? What if he's stupid and he doesn't realize we're right? ...thousands of dollars in legal fees later... Is there any way he could win? Wouldn't it cost more than the difference that we're arguing over in legal fees and court costs? Who would have to pay those fees? Could we make him pay our attorney fees if we win? So many questions, so little time... So many unethical contractors, not enough bullets...

I must say, our excavating/landscaping contractor was brilliant and fair, and our concrete and plumbing contractors did perfect work for a very good price. Everybody else was s**te!

- Unhappy

[dpb]

...[snip other points I think mostly immaterial]...

The contract is the contract. What it says is what it says. The obligations of each are spelled out in it and in approved change orders to it.

Of course he can sue (or more likely, try to place a mechanics' lien on the house would be what I would guess he would actually try to do). From the story as told, probably wouldn't win, at least much. But, of course, there are almost always two sides to any story and we don't have his. :)

What you should do is take the concern to your attorney (you _DO_ have an attorney, don't you?) and let him handle it. Don't discuss dollars or payments further w/ the contractor if they get beyond the contractual limits set but refer him to the attorney. Don't commit to anything, don't do anything...

As a practical matter, however, how much _did_ materials escalate? Was there weather or other mitigating factors that caused at least some of the delays? And especially, are you being _fully_ upfront w/ him on the change orders and other requests, etc. and are there other features than those on the official change orders that ended up in the house that really, really aren't what the original plans called for? You might consider what would be a fair compromise as a fallback position rather than getting into a real battle here...there just might be at least some basis for his claim although I'll agree that to wait until the end before raising concerns isn't the way to deal with it--he should have asked for change orders or raised concerns along the way.

[Tony]

no way, if he ever stood a chance, he hung himself with your material price warranty

the judge would say, "mr contractor, consider 13,000 a cheap education on how to bid a job"

If you start talking settlement with the contractor, he's going to get the big head and think his request is ok it's not ok

he should validate this, he should admit to underpricing..

tell him show you where any material cost 13,000 more than original bid reflects

you're right! it's not your problem if he can't manage people the judge is going to laugh him out of the court room

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[Pat]

There's not way to answer your questions without seeing your contracts, and no, I don't want to read them. Take them to your attorney and have your attorney fire off a letter to him and/or his attorney. Maybe even send the check along at the same time as "payment in full".

If you contract was fixed price, then it may or may not be fixed price. If it was "time and materials", then you pay him his time and materials.

Just out of curiosity, does he have a performance bond on the project?

Good luck with it, but you need an attorney.

[HappyHumanist]

We do not have a contract, except an oral contract that the accepted bid would not change unless we made changes, and then only the costs related to the change would be added to the bid. It was explicitly state, orally, that market prices would not affect the bid once we "locked in." The only prices that could change would be for our subcontractors, and we subcontracted with them directly. There is no written contract, unless you consider the bid a contract, which is just a bulleted list of materials and labor with prices and a total. At the bottom of the list and below the total is a statement that says, more or less, that changes to the design will cause costs to be added to the bid, but that otherwise the bid is just that, a bid, a quoted price to do the job. There is no "performance bond." Nothing was ever filed with the register of deeds or any other government agency, except a septic plan and a building permit, neither of which mention prices, contracts, etc. It was the most unprofessional joke I've ever seen, but we trusted them, because it's such a small town that we didn't think they would be stupid enough to commit contractor suicide and try to screw over a high profile custom like us. We built in the most affluent neighborhood in town. Well, they can pretty much assume no one else building out here will ever hire them for anything. They'll have to go back to $140K hillbilly ranch "spec homes."

- Unhappy

On Jun 23, 4:55 pm, Pat wrote:

[Kickstart]

wipe your ass with the oral contract, oh yeah that's right , it ain't on paper. Pay him and be dome with it. $13k is less than a lawyer. You will never "win" with an oral contract. Count your loss and be done with it and enjoy your home. Or , come back in 2 years and $25k later in attorney fees telling me I'm right.

Kickstart

[Pat]

So let me get this straight. You're building a $290,000 house with no contract, no architect, and no engineer -- and you're calling the CONTRACTOR bad. This is a problem you're bring on yourself.

I don't have any idea what the law is in your state, but in NYS it is awfully difficult to enforce a written contract. In fact, it might even be unenforceable because it's re land.

If you have a quote, and it is accepted, and signed by both parties, you're in a better situation. You can claim that it is a de facto contract. That, a lawyer, and a bundle of money might be able to solve your problem.

Your only option is to try to starve him out. He wants the last payment and is willing to sue you for additional funds. Well he might as well sue you for the whole amount. I think your only option is to not pay him anything, then offer him full payment in return for a release.

Good luck with it.

[Kickstart]

Sorry I forgot something. Since your dumb as a rock I should also tell you to have a lawyer make the payment, after he signs a lien waiver and a contractors affidavit stating that there are no liens and everyone is paid in full. Good luck

kickstart

[HappyHumanist]

I agree, Pat. That's what I was planning on doing. I'm giving him a spreadsheet that starts with the amount we agreed upon and adds on certain changes that we agreed to and their respective costs, like moving a few walls--nothing major. The final number will be presented. To receive that amount, he has to give me a new final bill for that amount. And before he even does that, he has to finish the dozen or so outstanding tasks. I'm giving him 30 days to finish the outstanding tasks (minor issues that could take one day with a crew of

2 guys). If he does not finish the tasks in 30 days, I will hire other contractors and subtract their bills from the amount due. And again, that final amount due has to be agreed on explicitly with a new final bill. If he doesn't agree, then he doesn't get anything, and he'll have to sue for the entire $50K-$70K, at which time I will go after him for all the other shortcomings in quality and workmanship.

This is war. I'm not going to get screwed over by another contractor. I've had it. They all play this game. The give a price, and then, as soon as you accept the price, they go to work on finding reasons to raise it. I have to fight this on principal. I'm also going to tell everyone who will listen to stay away from these jokers.

Thanks for your advice.

- Unhappy

[Tony]

why haven't you paid him the 60,000? this much you two agree on

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[RicodJour]

Does anyone remember this joker asking how _not_ to pay a drywall contractor from a thread some months ago?

I were the suspicious sort, I'd think there was a pattern of blaming other people for their own failings.

To the OP: You don't know how to protect yourself, you don't know that you need to put everything in writing, you don't know how to deal with people in a straightforward manner - what makes you think you know right from wrong and that you won't be laughed out of court?

Go ahead piss all over you own shoes and make yourself miserable. You'll spend more money and a hell of a lot of time to "prove" you're never wrong. Only one problem - you're probably wrong. Don't take my word for it. Listen to the lawyer that will take your case - they always love people that are standing on principle...as long as they pay the lawyer's bills on time.

Oh my. I just thought of something. You're not so entirely deluded that you think a lawyer won't require you to pay as you go, but will take only 1/3 of your "winnings", are you?

R

[PeterD]

What is he going to sue you for? Breach of contract... Won't get past first base on that one.

Court will quickly tell him he has no case, assuming his lawyer doesn't do it first. Lawyers don't take loosing cases, regardless.

Sure, when hell freezes over.

Quite possibly a counter suit would succeed in this case.

[RicodJour]

C'mon, Tony. That would be a sign of good faith and the OP has no faith in contractors. Especially those they owe money to.

R

[PeterD]

Wow, bad move... I take back all I said before. See a lawyer, NOW.

[Glenn]

)If) the story is as straight as this one side says it is, I would set in the 60 grand as a bargaining tool until it is settled where both sides agree. 60 thou is a sizable bargaining tool.

[HappyHumanist]

Good advice everyone. Yeah, there are some things I will do differently next time, like a written contract. Nevertheless, your advice--both sides--is encouranging, everyone. I'll let you know how it goes. Thanks!!!

- Unhappy

[Pat]

ago?

If I were the suspicious sort, I'd think there was a pattern of

Don't worry, he/she won't like the lawyer either, so he/she wont want to pay him/her either.

[Sanbar]

Who is the contractor. I am also in the Wisconsin area.