Building a room addition--have run into problems...opinions please?

[disneybound31]

We have saved 10 years to build a 320sq ft. family room addition on our house...we thought we had credible, reputable contractors, but just found out yesterday that the contractor has 'semi-retired' and the foreman is not a licensed and bonded builder which is why the job is going under the leadership of the 'semi-retired' gentleman.

They told us to pull the permits yesterday in order to begin and when we tried we were told that (in TN) the builder must pull permits, not owner, for liability and regulation reasons (if a construction project is over $25k).

Long story short, when I called head contractor about this he balked and I was forced to ask some uncomfortable questions and that is when I found out that he does not want this job to affect his semi-retired state and so he is 'keeping the job off the books to avoid payroll taxes' as well as other things.

This sounds very not-above-board to me and I asked about our contract and he said we had a verbal one. I then asked for a legally binding one and he said no problem, but that I would need to pay any subcontractors (electrician, drywall, roofers) directly and not through himself or the foreman. I feel uncomfortable with that as well, because what stops a drywall guy from quoting one price then demanding another when job is finished? Among other concerns.

The 2 gentleman have done extensive research for this addition project and the foreman recently did a large flooring project for us which went beautifully, however, we DID NOT know at that time he was unlicensed and not bonded, though he does carry his own workmans comp, I just found these things out yesterday.

Needless to say, this has brought the project to a complete halt until they draw up a legal contract and get us better, firmer cost numbers....ground was to be broken next week, but I am very leery now...what to do?

They are both very reputable and have done other work in past years for friends and family, but not in this semi-retired, off the books, don't pay anything directly to head contractor way...this certainly can't be the norm? We have never undertaken such a large home renovation before and didn't expect this weird roadblock.

Let me add that I realize this sets me up to look like an unintelligent hick who did not do her research, but I assure you I have done many things to gather info and thought I had asked the correct questions. I was told by a close friend that the foreman WAS licensed and bonded so I did not feel the need to ask for copies of that info, but now I realize that was a mistake. Sometimes in a small town people are offended and think their character is being attacked when such things are requested, but when that is the case I usually do not do business with those types. I assumed things were on the up and up which is my mistake- although I feel in this circumstance I was deliberately mislead in some areas...opinions?

 

[csharpwv]

STOP IMMEDIATELY!

You do not want to enter into a contract with someone who is 'trying to keep things off the books'.

If you are off his books, how can you prove.....anything???

This whole proceeding is a legal train wreck in the making.

We learned our lesson by working with Home Depot for a kitchen remodel. NEVER again - they are the 'contractor' and they use a 'sub-contractor' for EVERYTHING. How can they be the contractor if an actual Home Depot employee never sets foot on the job site?!

You will regret and doubt this process from start to finish - RUN as fast as you can and find a contractor who wants EVERYTHING on the books.

If they have everything on their books, you can have everything on their books... and your books.

Immediately discontinue anything with this contractor and his 'semi-retired' friend.

You will not regret delaying your project - you will regret bad work that leaves your home less valuable and your hard earned cash down the drain.

Don't waste another minute of your time, find a fully legitimate contractor!

 

[jmartinez1895]

I too would not go any further with this guy. You re going to end up in a lawsuit if you proceed. This sounds way to risky. I have issues confronting people and I can see how this would be hard to face, but I would just shoot from the hop and tell him the truth. You could also call a local attorney and ask about the situation and then tell the contractor that your attorney advised that you find someone else ( I have a good hunch that any attorney is going to recommend that you not proceed)

 

[mistysue]

Long story short, when I called head contractor about this he balked and I was forced to ask some uncomfortable questions and that is when I found out that he does not want this job to affect his semi-retired state and so he is 'keeping the job off the books to avoid payroll taxes' as well as other things.

This sounds very not-above-board to me and I asked about our contract and he said we had a verbal one. I then asked for a legally binding one and he said no problem, but that I would need to pay any subcontractors (electrician, drywall, roofers) directly and not through himself or the foreman. I feel uncomfortable with that as well, because what stops a drywall guy from quoting one price then demanding another when job is finished? Among other concerns.

This brings up a couple questions to me-
First of all, I wouldn't do the whole "off the books" thing. That could twist into an awkward question of who is responsible for the payroll taxes if anybody gets in trouble, and especially if you hand over cash, you could get turned into the "bad guy" employer who didn't pay the payroll tax.

Next, "what sops a drywall guy from quoting one price then demanding another?" His quote. In most cases, setting up a contract does not really give you protection that their signed quote doesn't. I work in construction, so I know very well that if they are going to ask for more money they are going to do it contract or no. You should confirm with them up front that if they run into issues and have to ask for a price increase that they will ask first, but if this happens they are going to ask for the increase with or without a contract. The contract will be per the plans, and if the plans change (there is always a hiccup somewhere), they need more money.

Also- exactly what does "licensed and bonded" mean to you? People (especially small contractors) like to throw around that term but it doesn't apply to everything and likely isn't as black and white as it sounds. Certain trades require licencing. These are your plumbers, electricians, some mechanical workers. Certain trades, generally finish work, there really is no such thing as being licensed to do the work. There is not a license process for a general contractor. It isn't a thing. Anybody can say it but the license doesn't exist, so technically everybody's licensed. Workman's comp and general liability also vary by who they actually employ. If you are hiring a general contractor and all of the workers are sub-contractors, that effects what them being bonded means, as well as what their actual bonding needs are. There is not really an across the board correct answer for what license and bonding means.

If you are hiring some guy who is just going to hire a bunch of subs, have you considered hiring the subs and saving yourself a good 20-50% of the cost? If this guy really is missing any of the bonding or licensing he needs, you do realize that getting somebody else to step in will probably make your price jump.

 

[ilovemk76]

We have saved 10 years to build a 320sq ft. family room addition on our house...we thought we had credible, reputable contractors, but just found out yesterday that the contractor has 'semi-retired' and the foreman is not a licensed and bonded builder which is why the job is going under the leadership of the 'semi-retired' gentleman.

They told us to pull the permits yesterday in order to begin and when we tried we were told that (in TN) the builder must pull permits, not owner, for liability and regulation reasons (if a construction project is over $25k).

Long story short, when I called head contractor about this he balked and I was forced to ask some uncomfortable questions and that is when I found out that he does not want this job to affect his semi-retired state and so he is 'keeping the job off the books to avoid payroll taxes' as well as other things.

This sounds very not-above-board to me and I asked about our contract and he said we had a verbal one. I then asked for a legally binding one and he said no problem, but that I would need to pay any subcontractors (electrician, drywall, roofers) directly and not through himself or the foreman. I feel uncomfortable with that as well, because what stops a drywall guy from quoting one price then demanding another when job is finished? Among other concerns.

The 2 gentleman have done extensive research for this addition project and the foreman recently did a large flooring project for us which went beautifully, however, we DID NOT know at that time he was unlicensed and not bonded, though he does carry his own workmans comp, I just found these things out yesterday.

Needless to say, this has brought the project to a complete halt until they draw up a legal contract and get us better, firmer cost numbers....ground was to be broken next week, but I am very leery now...what to do?

They are both very reputable and have done other work in past years for friends and family, but not in this semi-retired, off the books, don't pay anything directly to head contractor way...this certainly can't be the norm? We have never undertaken such a large home renovation before and didn't expect this weird roadblock.

Let me add that I realize this sets me up to look like an unintelligent hick who did not do her research, but I assure you I have done many things to gather info and thought I had asked the correct questions. I was told by a close friend that the foreman WAS licensed and bonded so I did not feel the need to ask for copies of that info, but now I realize that was a mistake. Sometimes in a small town people are offended and think their character is being attacked when such things are requested, but when that is the case I usually do not do business with those types. I assumed things were on the up and up which is my mistake- although I feel in this circumstance I was deliberately mislead in some areas...opinions?

Run!!!!!!

I hope you have not given them any money.

 

[jperrot1]

My thoughts are the same as above. How much did you pay these guys, and what work did they already complete with that money? If you gave them very little money so far I would kindly ask for a refund (fair amount minus the work they did already) and find another contractor to do the work. Having a floor done is one "easy job" but to have a complete room built is a whole different matter. I don't see how a floor could be installed in an unsafe manner, but I can see lots of safety and structural problems that that go wrong with a whole room addition.

 

[wiigirl]

Run!!!!!!

I hope you have not given them any money.

My thoughts exactly.

 

[starry_solo]

Run and find a licensed contractor. Also, make sure that contractor takes credit cards for payment.

 

[minnierocks]

While I know you are frustrated and anxious to begin because you have waited so long...there is no way you should risk that money that you have been saving for so long. You have waited 10 years...trust your gut and go with someone who will give you firm prices and a legally binding contract. Otherwise, it is going to cost you more than just a little more time...it might even cost you MORE than you have saved. Run...

 

[disneybound31]

STOP IMMEDIATELY!

You do not want to enter into a contract with someone who is 'trying to keep things off the books'.

If you are off his books, how can you prove.....anything???

This whole proceeding is a legal train wreck in the making.

We learned our lesson by working with Home Depot for a kitchen remodel. NEVER again - they are the 'contractor' and they use a 'sub-contractor' for EVERYTHING. How can they be the contractor if an actual Home Depot employee never sets foot on the job site?!

You will regret and doubt this process from start to finish - RUN as fast as you can and find a contractor who wants EVERYTHING on the books.

If they have everything on their books, you can have everything on their books... and your books.

Immediately discontinue anything with this contractor and his 'semi-retired' friend.

You will not regret delaying your project - you will regret bad work that leaves your home less valuable and your hard earned cash down the drain.

Don't waste another minute of your time, find a fully legitimate contractor!

I TOTALLY agree with you! I even said exactly that right back to him...how do I as a homeowner have ANY recourse if something goes bad? His response..."we wouldn't do that to you". How stupid would I be if I took that as a binding contract?! I told him I have to have a paper, signed contract and evrything on the books--we are definately getting a second estimate from another contractor now. It shouldn't be this stressful to add a room on.

 

[2disneyboys]

Op, Don't walk away from this deal. RUN away from it. Now, if the GC had told you upfront that he was doing things this way for a reason, the I would perhaps say, if your comfortable taking the risk, go for it. But the fact alone that you had to "discover" this on your own and are made to feel "ackward" about it screams to me to run very very far away. The quality of the work is only a small part of the whole project (and yes it's an important part, but still there's more to it) It does you no good to have a high quality family room, and yet have some sort of general liability or workers compensation claim you have to pay on your homeowners insurance because the parties involved did not have the appropiate insurance (licensed and bonded are old school terms and are not nearly as important as making sure the peole doing the work have Workers Comp insurance (to protect the employee's who may get injured on the job) and General Liablity Insurance (to protect you for anything they may be liable for) In addition, if the Chain of Command does not pay or handles taxes correctly, yep, your on the hook for that and can end up having a lein against your home until YOU settle it or fight it out in court (which of course costs lots of $$)

I can only imagine how disappointing this is seeing how you have saved and anticipated this for so long, but, please do not ignore your insticts... get away from this situation as quickly as possible. & if you do deciede to exit the situation and you get some sort of grief from the GC or his sub about breaking a verbal contract, I'd reply that he broke it first by not having proper insurance and licenses.

Protect yourself first - no one else will make sure things work out for YOU... Good Luck

 

[disneybound31]

This brings up a couple questions to me-
First of all, I wouldn't do the whole "off the books" thing. That could twist into an awkward question of who is responsible for the payroll taxes if anybody gets in trouble, and especially if you hand over cash, you could get turned into the "bad guy" employer who didn't pay the payroll tax.

Next, "what sops a drywall guy from quoting one price then demanding another?" His quote. In most cases, setting up a contract does not really give you protection that their signed quote doesn't. I work in construction, so I know very well that if they are going to ask for more money they are going to do it contract or no. You should confirm with them up front that if they run into issues and have to ask for a price increase that they will ask first, but if this happens they are going to ask for the increase with or without a contract. The contract will be per the plans, and if the plans change (there is always a hiccup somewhere), they need more money.

Also- exactly what does "licensed and bonded" mean to you? People (especially small contractors) like to throw around that term but it doesn't apply to everything and likely isn't as black and white as it sounds. Certain trades require licencing. These are your plumbers, electricians, some mechanical workers. Certain trades, generally finish work, there really is no such thing as being licensed to do the work. There is not a license process for a general contractor. It isn't a thing. Anybody can say it but the license doesn't exist, so technically everybody's licensed. Workman's comp and general liability also vary by who they actually employ. If you are hiring a general contractor and all of the workers are sub-contractors, that effects what them being bonded means, as well as what their actual bonding needs are. There is not really an across the board correct answer for what license and bonding means.

If you are hiring some guy who is just going to hire a bunch of subs, have you considered hiring the subs and saving yourself a good 20-50% of the cost? If this guy really is missing any of the bonding or licensing he needs, you do realize that getting somebody else to step in will probably make your price jump.

Good questions....to be honest I thought all general contractors were licensed in some way (meaning they have some type of certificate from state or another licensing entity that proves they are capable). Next I thought bonded or insured was a requirement in the event someone becomes injured on my property or damages something while they are working here. We own a 65 year old business and hold all the necessary insurance, business licenses, etc. in order to cover our butts if someone falls in our building or whatnot...

Again, I have no experience with hiring a contractor besides what I have googled or asked others- so I thought it was prudent to get a copy (or at least ask) of/about license and insurance/bonding. So should it not really matter that foreman is neither? He seemed kindof sheepish when admitting he was not...so is it a bad thing or a neglible thing that I should not worry about?

 

[disneybound31]

Run!!!!!!

I hope you have not given them any money.

Not yet!

 

[disneybound31]

My thoughts are the same as above. How much did you pay these guys, and what work did they already complete with that money? If you gave them very little money so far I would kindly ask for a refund (fair amount minus the work they did already) and find another contractor to do the work. Having a floor done is one "easy job" but to have a complete room built is a whole different matter. I don't see how a floor could be installed in an unsafe manner, but I can see lots of safety and structural problems that that go wrong with a whole room addition.

Totally agree...I told DH that we got off lucky since the flooring went off without a hitch. And that I am so happy that the building inspector would NOT let us get the permits ourselves (thereby following the rules). In our small town sometimes when people 'know' each other they tend to bend the rules as to not offend...that is where I buck the system though because I am known to refuse to 'play along' with that mentality. If there is a rule to be followed we follow it- we don't fudge on our timecards and we don't try to skirt the system-- I know these contractor guys are probably rolling their eyes at me, but whatever.

 

[disneybound31]

Run and find a licensed contractor. Also, make sure that contractor takes credit cards for payment.

Do they HAVE to take credit cards? I am fine with a check (never cash) because that is a built-in receipt system....I would love a credit card set up because then I could get WDW rewards but around here I would not expect such a thing...especially out of a small family run contracting business.

 

[disneybound31]

Op, Don't walk away from this deal. RUN away from it. Now, if the GC had told you upfront that he was doing things this way for a reason, the I would perhaps say, if your comfortable taking the risk, go for it. But the fact alone that you had to "discover" this on your own and are made to feel "ackward" about it screams to me to run very very far away. The quality of the work is only a small part of the whole project (and yes it's an important part, but still there's more to it) It does you no good to have a high quality family room, and yet have some sort of general liability or workers compensation claim you have to pay on your homeowners insurance because the parties involved did not have the appropiate insurance (licensed and bonded are old school terms and are not nearly as important as making sure the peole doing the work have Workers Comp insurance (to protect the employee's who may get injured on the job) and General Liablity Insurance (to protect you for anything they may be liable for) In addition, if the Chain of Command does not pay or handles taxes correctly, yep, your on the hook for that and can end up having a lein against your home until YOU settle it or fight it out in court (which of course costs lots of $$)

I can only imagine how disappointing this is seeing how you have saved and anticipated this for so long, but, please do not ignore your insticts... get away from this situation as quickly as possible. & if you do deciede to exit the situation and you get some sort of grief from the GC or his sub about breaking a verbal contract, I'd reply that he broke it first by not having proper insurance and licenses.

Protect yourself first - no one else will make sure things work out for YOU... Good Luck

Yes, good points, thank you. I had not thought about my personal liability for taxes, etc. being handled correctly. When he made the statement about not wanting to pay payroll taxes which is why I would have to pay each worker separately then it was another red flag to me. PLUS, I just remembered that he said he did not want ANY checks I write to have HIS name on them (the head, semi-retired contractor) he only wants me to write them to the unlicensed foreman and then the foreman would give the head contractor $ from that check??!?! Like as in= no record of income or money hidden from government?! Would this be head guy getting paid 'under the table'?! With no way for me to prove how much $ he is getting from foreman?! What if head guys says 'foreman only gave me half of amount he was supposed to...' this all just is so screwy and weird. Never heard of such a thing!!

 

[hlg22]

I know how hard it is to walk away from a contractor when you have invested so much time with them (I did it myself on my basement reno), but there are so very many red flags here.

If you do decide to proceed (I wouldn't), I'd get a lawyer to look at any "legal contract" this guy draws up to make sure you're not missing anything.

When I had to replace my contractor, I went to my neighborhood listserv to find his replacement, and got a lot of recommendations for a contractor who lived right in the neighborhood and had worked on many houses in the area (i.e., was very familiar with the quirks of the old houses in the area and the city permitting requirements/variances) I could tell from the very first meeting that he actually cares about quality workmanship in old houses like mine. He ended up being a dream to work with and even though I lost almost a year in getting the project done, replacing my first contractor was definitely the best decision.

 

[tvguy]

Well, if it was me, I would look elsewhere.

However, having said that, our neighbors had undertaken a number of projects with unlicensed contracts and not have a problem. And they have made it clear they would never ever use a license contractor. They also don't get permits. Sadly, having done my addition with a licensed contractor and permits, I understand that. Some of our local building codes just don't make sense.

 

[OklahomaTourist]

Don't walk, *RUN* away from this guy RIGHT NOW. If *he* doesn't think you have a contract, then he has *nothing* to hold over you. Anytime someone asks for something fishy like that, "pay me off the record, cash only," whatever, get the heck out.

The guy is obviously concerned about screwing up a calculated pension/SS benefit of some sort. That cannot be your problem.

Go find a real contractor now while you have the chance and before ground is broken.

 

[StephMK]

It's good he has Work Comp but you also want someone who has GL and Auto Liability. Ask for the name of the agent and have them send you a certificate of insurance. This shows their carrier, dates of coverage, and limits. Don't let the contractor give you an outdated standard copy because their coverage could have been cancelled.

For a project this big and long lasting, you probably want to be as careful as possible to protect yourself and your investment.