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How to Deal with a Bad Contractor: Ultimate Guide for Real Estate Investors

— April 20, 2021

We live in the era of online reviews and most contractors will have their profile on one or more of these sites. You can make your voice heard and make sure you warn others about the unreliability of the contractor.

Being a real estate investor is an exciting occupation that can bring along many benefits. However, it’s also a risky business as you need to make initial investments and work hard to get them back. When things go well, you might make a killing, but when things get tricky you might find yourself in a very difficult position. 

This is especially true when it doesn’t come down to you. As an investor, you’ll have to rely on contractors to fix the houses you want to flip and unfortunately, contractors are not always reliable. So what can you do to address this problem?

Let Them Go

Firing a contractor is not an easy step to take. For starters, it means you will have to find someone else to do the job, which will lead to unavoidable delays. However, it’s better to look for other emergency plumbing las vegas contractors than to be stuck with one that’s going to give you bad results.

That said, things might get difficult if the contractor decides to claim you are breaking the contract by firing them. This is why you must keep written documentation of everything that’s taking place. Plus, you need to be on the lookout and make sure they are using the quality materials you agreed to when the contract started. You need to be able to prove that the contractor broke your agreement first. Plus, make sure you send them a notice before terminating the contract. One of the big problems with this approach is that it’s very unlikely that you’ll get your money back.

File a Claim with Their Insurance

You should always work with insured contractors. This is because they have surety bonds with their agents, which are specifically there for the case of a dispute with a client. By contacting their insurance company and filing a claim, you might get an opportunity to recover your money. Of course, to be able to do this, you need to ask for insurance and a copy of their bond when you first start working together. If you are working in real estate management, this is something you must always do.

Complain to the State Board

One of the benefits of working with licensed contractors is that you can file a claim to the state board if you need to. Contractors can charge more and get access to more projects when they are licensed, and they won’t want anything to put that license in peril. Therefore, it is likely that the contractor will look to put an end to the entire situation by returning your money or fixing the issue instead of putting their license at risk.

Plus, you don’t need to get additional information from the contractor, as you can simply look online for the contact information of the Nevada licensing board. 

Go to Court

It’s very unfortunate when things reach this stage, but sometimes you might need to bring things to court. You can file a suit in the small claims court, which is one of the most affordable options. This is because you don’t have to pay that much money to bring a case forward and you can even represent yourself. This will help you avoid costly legal fees.

Something to keep in mind is that these courts award small amounts. Therefore, if you wrote a big check to your contractor, it might be best to hire an attorney and go to a larger arena to get things settled.

Make it Public

We live in the era of online reviews and most contractors will have their profile on one or more of these sites. You can make your voice heard and make sure you warn others about the unreliability of the contractor. This is another way to hold them accountable and make sure their actions don’t go completely unpunished if other avenues didn’t work.

Online reviewer; image courtesy geralt via, CC0.
Online reviewer; image courtesy geralt via, CC0.

Likewise, make sure you check these sites before hiring a contractor. The experiences of others can be very telling in these cases.

A Contractor Did Poor Work, What to Do?

As stated before, you need to document the work of the contractor at all times because if you don’t, you won’t have any proof. Photos, written agreements between you and the contractor, and even opinions from second contractors can be useful in this context.

Of course, you should always check the work before you make the final payment. If they did a bad job you can refrain from paying them and they are the ones who will have to prove they did comply with all of your agreements.

Before bringing the case to their insurance, board, or court, you need to talk to the contractor and address the issue. If they are unwilling to correct the problem, then the best thing is to end the contract. This is even more important if you were planning on having them work in another area of the house afterward. 

The Contractor Surpassed the Budget, What to Do?

This can be a problematic issue. If you are remodeling an old house, you will likely find hidden issues once the remodeling beings. The contractor is probably going to warn you about it before he even begins.

If you have no reason to suspect hidden issues will show up, you can establish a no-tolerance clause in the contract in which it is clearly stated that going over-budget is simply not an option. Also, you can add that any additional expenses need to first be approved by you. This is a good way to keep control of the remodeling process. Even when the contractor comes to you with such an issue, you have a right to get a second opinion to ensure the additional expense is needed.

The Contractor Left the Job Unfinished, What to Do?

When this takes place you might want to go all out and contact everyone from their insurance agent, to the court, and their licensing board. This is because you were stolen from if you paid for a remodeling job you didn’t get. This is something that should raise all the alarms and be addressed as a serious issue. 

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