Q: Our contractor was supposed to enlarge the pool area, refinish the pool, and renovate the pool deck. The work is about half complete and the contractor has effectively abandoned the job site and is unresponsive. We do not want to wait for this contractor but also want to handle this correctly. What can we do?
A.B., Treasure Coast
A: The first step is to look at your contract and I would recommend you have the contract reviewed by your legal counsel. If the contract has a favorable termination provision, then you can exercise those termination rights and move on to another contractor to finish the work. If the contract is silent on termination, or if it has an unfavorable termination, then you should follow the contract requirements before you engage another contractor. This may require you to provide an opportunity to cure the breach and finish the work, and it may require you to mediate the dispute before you can terminate the agreement. Each contract has a different requirement to terminate, even if one party is in breach of the contract, and even if one party is nonresponsive.
Assuming you are able to get a clean break from your contractor, the next issue is transferring the permit. Most counties have a streamlined mechanism to the transfer the permit from one contractor to another – even if you the prior contractor is non-responsive. It is critical that your new contractor follow the local requirements for permitted work.
At the end of construction, you may end up paying more than your contract originally required. For example, if your original contract was for $50,000, and you paid the original contractor $30,000 and the second contractor $40,000 to finish the original scope of work, you paid $20,000 more than you would have paid if the original contractor performed under the original agreement. You may have a cause of action against the original contractor for the difference and may be able to recover attorneys’ fees to recover these amounts.
Finally, look out for unpaid subcontractors. Even if you paid the general contractor for the work actually completed, it is possible the general contractor did not pay subcontractors performing parts of the work. If the subcontractor timely provided statutory disclosures to you, it is possible the subcontractor has lien rights against the property, and you may have to pay the subcontractor even though you already paid the general contractor.
In general, this question highlights the necessity to make sure you have a favorable contract from the very beginning. It is important to require releases of liens from subcontractors as you make partial payments. It is important to have a favorable and clear termination provision. It is also important to require the contractor to keep and maintain certain insurance coverages. When embarking on a significant (and expensive) project, whether before the contract is signed, or after if the contractor abandons the project, you should work with your community’s attorney to put the Association in the best position in the event things go wrong.
Steven J. Adamczyk Esq., is a shareholder of the law firm Goede, Adamczyk, DeBoest & Cross, PLLC. To ask Mr. Adamczyk questions about your issues for future columns, send your inquiry to: firstname.lastname@example.org. The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, Adamczyk, DeBoest & Cross, PLLC or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.