San Antonio Real Estate Attorney Ryan Reiffert Quoted in Redfin Regarding What to do if a Contractor Quits in the Middle of a Job
As a San Antonio real estate lawyer, I have seen clients and others in the field get burned over and over by failing to adhere to one or more of these key principles. If you do not always keep financial incentives at the top of your mind and at the forefront of your concerns, you stand the potentially be taken advantage of by an unscrupulous contractor. An ounce of prevention is worth a pound of cure. Some of my clients have experienced this firsthand. This is why using a well-drafted real estate contract up front is so important, and why it is absolutely crucial to have a competent real estate attorney helping you with your earnest money contracts or other real estate acquisition agreements. For other real estate insights, stay tuned to this blog.
Don’t let the contractor get “ahead of you”The first thing to do is prepare for a contractor to quit in the middle of a job and never let a contractor get “ahead of you.” While many contractors are honest and hardworking, some will request a large amount upfront and then disappear without doing much or any work. In your agreement, set forth a schedule for progress payments according to the percentage completion of the job. Something like paying every 10% or every 25% completed. And from this amount, you withhold 5% or 10% as “retainage” that you will hold until full job completion. As a result, if the contractor ever disappears, you are not harmed, and you can hire someone else to complete the job. The contractor has a financial incentive to complete the job on time for the full payment. As for the cost of materials, you should either require receipts with the exact amount spent on the materials or have materials delivered directly to the site. If you paid the contractor upfront and/or let them get ahead of you on the job, you may have to resort to legal remedies such as a lawsuit. Always have a good solid contract drafted by a qualified real estate attorney and ensure that you get a personal guarantee from as many people as possible – the contractor and anyone else you can. If a corporation or LLC signed, you can sue that entity, but the entity can be emptied, and the assets moved around, resulting in a much harder time for you. – Ryan Reiffert, Attorney at the Law Offices of Ryan Reiffert in San Antonio, TX