Customer not paying after rough-in

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speedystevie

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Long Island, NY
We have a customer who has been good up until this point. The customer now owes us $3500 since the rough-in has now been completed. She has added some electric heat to the project and has brought her over budget and now appears to be running out of money. She suddenly now is saying that she will not pay until the inspection is completed(not surprising).

It states clearly in our estimate that a 40% payment is due when the rough-in is completed and not the other way around.

Has anyone had experience holding the customer to this and how far can a contractor go. We know that she could probably call and open an inspection app herself since no license is required in her area.

I just hope the only choices aren't to lean or judgment.

Steve
 
Re: Customer not paying after rough-in

How soon can you get the rough-in inspection? If you can get it right away, I'd say it's not worth worrying about, but otherwise, you need to be firm. Unless the terms say that payment is not due until after inspection, you need to let her know that since you have no control over when an inspection might take place, you need to be paid now.

Every now and then I have someone try to withhold payment until after an inspection, but it's generally not a big deal since most AHJs I deal with can come out the same day I call.
 
Re: Customer not paying after rough-in

I can have the inspector out within 48hrs, I am using the inspection a leverage to get paid.

I can see where this one is going, I get the inspection and wont get paid for the job for a year. The other contractors and I can see that she is getting tight on money and im not going to be the one who gets the shaft.
 
Re: Customer not paying after rough-in

Ah -- you're saying you won't call the inspector out until you get paid, and if the inspection happens before you get paid, you won't have leverage to get paid.

So do you think this customer is trying to get past the rough-in inspection without paying you, thinking that they can finish the job themselves if you walk off the job for non-payment?

It might make sense to sit down with her and let her know about your concerns. Tell her you aren't interested in investing more time and money in the project if you aren't going to get paid in a timely manner. You might also mention that you don't want to have to put a lien on her house or take her to court.

Unfortunately, the legal system might be your only option.
 
Re: Customer not paying after rough-in

I would call for an inspection and get that out of the way. That way she has no excuse not to pay. I wouldn't pay a contractor without an inspection because I believe that's part of the rough. I have seen electricians get a draw and then walk if they felt they were not going to make enough money. I would present her with the invoice for the rough-in the minute the inspection is over. If she is short of money you want to be the first one paid. When you get the check run to the bank and make sure there is enough money in the account to cover it before you deposit. Do not offer any sort of credit or terms. Some customers know how to play the system and if you take a partial payment it can be hard to collect the balance. Remind her that in small claims court she will pay double.
 
Re: Customer not paying after rough-in

I have explained every angle to her and with difficulty stay professional. It has now become a e-mail war and our last e-mails are as follows:

E-mail from the customer:
The thing I find most upsetting about this situation is that you are holding me hostage with very thinly veiled threats such as no inspection until the rough in fee is paid, no CO until the final is paid. This is extremely insulting. I never held you hostage in any way and have paid promptly when there has been no dispute. I will pay you the $3200 requested at the time of inspection ( not before ) and I will pay you the final after the CO. I suggest you get the inspector here ASAP I will not be available from March 1-19.

Our e-mail to the customer:
"Ann,
It states very clearly in our contract that was provided to you that payments are due before inspections, it also states that moneys are due after rough-in in our estimate, not after inspection, and this is the reason why.

You have questioned our ethics and insulted us on this matter from the beginning of this discussion. We have only been defending our policies and billing.

I explained in the beginning that this is a company procedure. Procedures are in place to protect the company from uncooperative customers. In no way are they threats.

Once your payments are up to date we will call the inspector, I strongly suggest you take care of this matter before the 1st of March.

If you would like to discus the legalities of Construction you may contact our Attorney Wendy Smith @ 845-xxx-xxxx.

We will be expecting your payment."
(end of e-mail)

Now.. I know my case holds in court but I wonder if leagaly I can put a hold on the build. I guess my next stop should be the local buildings department.

This issue has become more of an argument of principle then anything. We are not counting on the money to pay our bills or anything. Its become more of a pissing match and I am to stubborn to back down..

[ February 21, 2006, 11:58 AM: Message edited by: speedystevie ]
 
Re: Customer not paying after rough-in

I suspected the building department wouldn't want to get involved. They're concerned with safety, not whether you get paid.

Since you have a contract, is there a clause that says you can hold up work until you are paid (e.g., trim out isn't started until rough-in is paid for)? If not, does the contract say anything about when you have to do the trim? If it's not specified, I suppose legally you can do the trim at your convenience, meaning sometime between now and when the earth stops spinning.

I generally get paid a significant draw upon passing rough-in, since, like growler mentioned, the customer has no excuse not to pay at that point. It's also a good time to be paid, since it could be a while before you get called back to do the trim.

Previously I've gotten final payment upon completion of trim, not upon passing final, since I've had difficulty getting one AHJ's inspectors out for finals (it was a low priority for them). But that AHJ relinquished its authority last year, and the new AHJ is very good about coming out quickly. Since the change, I've gotten every inspection I've called for (rough or final) on the same day I called. So now I don't mind waiting for a final inspection before getting final payment.

[ February 21, 2006, 12:50 PM: Message edited by: jeff43222 ]
 
Re: Customer not paying after rough-in

1. Call for and PASS the RI inspection.
2. Get paid.
3. Wait for the call to finish job.
2.5 She doesn't pay...
3. File mechanics lien on her house.

Now you basically own it for 2 yrs. She will pay or go bankrupt.

YOU call Attorney Wendy Smith and ask for her advise. That's why you have an attorney!!

Let us know what you find out!
 
Re: Customer not paying after rough-in

My experience is as an engineer having to contract people to provide services or being the service provider. Based on that my suggestions would be to provide the customer with a revised bid containing the following changes:

1. Payment terms for rough changed to after passing inspection.

2. All payments must be certified funds, received within X business days of meeting payment conditions.

3. Signed copy of revised bid must be returned to proceed.

This will not make her pay, but establishes that you are attempting to meet her demands, reasonable effort toward resolution. That is not required to win a judgement. However, in my experience it has been viewed favorably by arbitrators when hearing non-payment/incomplete work cases. Good luck....

Tony
 
Re: Customer not paying after rough-in

Originally posted by tshea:

YOU call Attorney Wendy Smith and ask for her advise. That's why you have an attorney!!
Click to expand...
I said earlier I know my legal rights, that's not what I'm discusing here. I was looking to see what has worked best for other contractors outside of the court system. And so far the best advice was to redraft a new invoice.

Thanks
 
Re: Customer not paying after rough-in

This may be a bit shady but what if you told her it passed inspection. Maybe have a friend walk thru with a clip board if she is allways home. Collect the cash the get the real inspection before drywall.

Tom
 
Re: Customer not paying after rough-in

This may be a bit shady but what if you told her it passed inspection. Maybe have a friend walk thru with a clip board if she is allways home. Collect the cash the get the real inspection before drywall.
Click to expand...
I think on somehow posing as a state/county/municipal employee my be illegal
 
Re: Customer not paying after rough-in

The adversarial stage has obviously been set and it is unlikely that it will get better. I understand your point as the contract clearly states paid after rough in. However I see nothing wrong with getting the rough inspection to help move things along and show your willingness to be fair. She has dug in her heels and you want to get paid. Draw up an amendment to the contract that sates she will pay immediately after rough inspection with a bank check, gauranteed funds. If you priced it right you should have less into it than the payment. if she wants to finish it herself or get someone else so be it.
 
Re: Customer not paying after rough-in

I think Tony gave great advice on how to deal with the situation.

You already have an e-mail stating she will pay you, but I'd be inclined to follow Tony's advice. She should pay per contract, but you may not have "authority" to hold up the job unless contract states something like rough inspection to be scheduled following payment. My contracts state rough payment due upon completion of rough wiring, but I'd be wary of holding up a job and having that come out in court.

What does your attorney advise regarding holding up inspection?

Based on the confrontations you've already had with the customer, if attorney says it's OK to hod up inspection, I probably would.
 
Re: Customer not paying after rough-in

All my contracts called fot 70% on passing final.I also included intrest if paid after 10 day of my invoice.Perhaps she is scared for some reason.Call for the inspection and the hand her the bill.Unless your contract calls for a trim as well as rough you could walk after getting paid.At only 40% how do you stay in buisness ?Thats not even the cost of materials.I only ran in to pay problems a few times.One took months before i got paid rough.When trim time came i told him i would need balance up front before i trim.He tried to impress me with who his father was and there name in furnature buisness.Ilet him know i was not impressed and if he wanted job finished then pay up front do to his slow pay on rough.Do not let the time run out from last work performed or you could get had
 
Re: Customer not paying after rough-in

Active1 your crazy if that customer takes you to task you could lost it all, with NO defence.
As for speedy 3500.00 bucks will not break the bank get your inspection, and go to the customer and collect your check.
Let this be a lesson in how to set up your contract to get your payment draws in a more workable manner.

J.Lockard
 
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