Solving Contractor Dispute Takes New Twist

Dear Monty: My wife and I invested nearly $1 million in a home renovation. Our yearlong warranty expires in May. I just received a note from my contractor that his company has gone out of business and cannot help us, and he "apologized for the inconvenience." However, we found that he opened a substantially similar business under a substantially similar name with the same employees, albeit a different LLC than the first. He is still listed as doing business in our state; however, the new company is in a different state. Thus, it seems he closed one LLC to protect against personal liability but is continuing in the same way under a new LLC. He needs to repair certain items, so technically, he did not finish the job. What, if any, recourse do we have?

Monty's Answer: Many unanswered questions will be necessary to answer your recourse question. Are these repairs worth $1,000 or $30,000? Have you paid the contractor in full? If you decide to pursue the builder, you will need an attorney to answer your question.

Based on the information you have shared, my role here is to provide you with the most logical options for you to consider dealing with your current circumstances. What I might do now, before doing anything else, is seek a different contractor's opinion on what it will cost to complete any required repairs and finish the project. I would ask two builders for a written opinion because their answers and pricing will be different. Plus, you may need quotes to complete the work to establish damages.

The next step is to visit with an attorney to get an opinion on the cost of cleaning up issues, the time it will take, and the chances of success. It is unclear if you have an attorney, but an attorney with real estate litigation experience may be best suited to help. (I have more information about picking home builders and attorneys on my website.)

OPTIONS TO CONSIDER

1. Select a different contractor. At least one of the two you sought for an opinion may be a good choice. Now, you also have views as to the cost to finish the work that you can share with your attorney.

2. Try to force the builder to finish the job. Using the current builder, who was paid already, may be more cost-effective -- but who would want to trust him to work any differently than he has in the past? One could wonder if this builder has any money. Who else is in line for money from him? Your attorney will likely ask you about lien waivers. If he is broke, he may not have paid subcontractors. If he is broke, ask your attorney if it is worth it to seek a judgment from him.

3. Subcontract the repairs yourself. It is unclear what repairs are necessary, but it is likely subcontractors performed much of the actual tasks in building the home. You may not need a general contractor. If there is a frenzy in new home construction, it may be challenging to find good subs.

There may be other options that I have not considered, or there could be some combination of these options you and your attorney agree upon.

Richard Montgomery is a syndicated columnist, published author, retired real estate executive, serial entrepreneur and the founder of DearMonty.com and PropBox, Inc. He provides consumers with solution options to real estate questions. Follow him on Twitter(X) @dearmonty or DearMonty.com.

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