Alec Caldwell
Deadbeat homeowners who refuse to pay
Canadian Contractor BusinessThe contractor is told that they aren't going to be paid: and if they complain, they are threatened with defamatory statements about their performance online. It's happening a lot.
Last week I looked at how online referral companies can be a great way for renovation contractors to get new business. However, it’s worth noting that obtaining business through this method can still cause headaches for contractors!
It seems that some homeowners hiring contractors from online web sites have an end game plan hidden up their sleeve called: I’m not paying you!
These “I’m not paying you” words are normally delivered right after the contractor requests the final payment for the completed job. Then, no matter how hard the contractor tries to resolve the recently-discovered issues, payment is still not forthcoming. It’s at this stage that the homeowner plays their final (pre-planned) card by threatening to post their new-found grievances against the contractor on the online referral company’s web site. A post like this can well affect future business coming through that site to the contractor, either by reducing any ratings they might have worked hard to achieve and/or by warning other prospective new homeowners to beware of them. It’s all part of the plan by these unscrupulous homeowners. And it’s time to expose this situation.
If contractors decide their back is against the wall, they might decide to hire a collection agency to finally collect their hard-earned money. At this time, stage two of the homeowner’s plan kicks in: A simple cease-and-desist letter from a lawyer will stop these agencies dead in their tracks. The only option left is to take the homeowner to small claims court. But the contractor is in a no win situation by now: The collection agencies cannot represent them but still expect their lion’s share of any settlement made against the homeowner. Then if a settlement is finally made in the contractor’s favor, some will find ways not to pay on the judgement against them.
One contractor recently told me he has incorporated a new system into his work week, to try and weed out these delinquent homeowners. He now employs someone to call the homeowners he is doing work for on a weekly basis. The idea is to ask the homeowners some pre-arranged questions about the job – do they have any issues and are they satisfied up to that point on the way it’s going?
It’s really about making a paper trail for yourself in case it’s needed as proof later. And in the process you might weed out these bad apples ahead of time.
Tell us about your experiences about homeowners who have refused to pay you for whatever reasons and what their excuses were!
Contact alec@carahs.org
Toll free 1-866-366-2930
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Owners/Builders LinkedIn group comment by: John Perrott:
“I would counter with a few ‘suggestions’ after reading this article. First off, I like the idea of the progression updates, but would suggest it should be via email rather than by phone. This leaves a continuous paper trail. Second, I NEVER employ collection agencies, you earned EVERY penny, why are you now giving it to someone else? Third, I would move to the small claims court long before I would ever hire said collection agency, and would ALSO register a lien on the home. Fourth, If they threaten to post accusations online regarding my work that are untrue, you can also sue them for defamation (allegations are easy to make, the repercussions, not so much). This also leads to possible criminal prosecution. Making false statements has consequences, make sure you stand up for your rights and reputation”
If you have been in the business awhile, you can usually sniff these problem client out, however you can still get caught.
This were good contracts, scopes of work, and paperwork will reduce the pain. What can be the best revenge is to pass the old debt otf to CRA…….
Collection agencies may back off, yet you have still affected there credit rating.
If they do post online, if you decide to defend yourself, you have to be the truthful calm one…..
The following are reply’s posted on blogs to this article:
“Is there a web sight where we can post deadbeats?” asks Bruce Brosko at the National Association of the Remodeling Industry (NARI)
“I only work for past customers and people I get a referral from a friend or past customer. I’ve been screwed in the past by people I didn’t know. Never work for lawyers. They are the only ones that I ever had a problem getting money from” SAYS Robert Davis at the Contractor Discussion Group. For Plumbers, Electricians, Remodelers, Roofers, HVAC, & Handyman
“I always get 1/3 down, 1/3 on start day when I show up with materials, and 1/3 at completion. This helps alleviate getting shafted as bad. The ones that have a problem with that are ones you cross and dot all T and I’s incase of having to go to court” SAYS Chris Jones at the Contractor Discussion Group. For Plumbers, Electricians, Remodelers, Roofers, HVAC, & Handyman
“The public is so conditioned to be wary of unscrupulous contractors. However, as contractors, we need to be equally vigilant in evaluating the consumers with whom we choose to do business. Once a rat, always a rat! Some consumers simply want something for nothing OR more than what they are willing to pay for. Fortunately, they are the minority, but, thanks to information access, they can be the most vocal with referral services, Yelp, etc. It all boils down to selecting your clientele as carefully as they select you…. or more so” SAYS James Carey at the National Association of the Remodeling Industry (NARI)
“I never encountered a homeowner who didn’t pay….in fact most are quick with the checkbook and never make an issue over it….only time I had trouble was with a plumber who still owes me $500.00, and a GC who seems to think he can pay when he so feels like it….now going on 3 and 4 months on two parts of the same job. I cant say bad things about GC’s because I work with one other who pays and even gives advances without me asking…Home owners are never an issue with me, but then I am a small shop and have wonderful customers” SAYS Matthew Saliger at the Owner/Builders Group
“Bottom line cover your ass and if you cant too bad. We are all big dogs here and if you cant stand the heat get out of the kitchen. I am tired of the those who cant get after it” SAYS Tim Gore at the Owner/Builders Group
I stay away from online lead generating companies. The homeowners who contact you are bottom of the barrel price shoppers who, by the nature of the lead generating company, already see your services as a commodity. The lead is usually sent out to dozens of contractors, who then chase the homeowner. You’re already starting the relationship on a lower step…the signed contractor is “privileged” enough to have been the cheapest selected contractor for the cheapest homeowner. And you say you have problems collecting with these people? GET THE HECK OUT OF DODGE! Stick your wee-wee in the meat grinder and you’re gonna get noodles…knowhadamean?
UNION ???
EVER TRY TAKING DEADBEAT HOMEOWNERS TO COURT?
the judicial system for this is a joke. even if the judgment goes in your favour,
try to get the money!, you still can’t.
gets even better, once their home is complete, they decide there are too many
imperfections and attempt to sue You instead! once You file this in small
claims.
we all know a lien does not anywhere if they dont plan on selling their home.
Contractors should be rallying the government to change the laws, and once
the judgment is in your favour, the court should be immediately demanding
payment,……the contractor sure cannot get the money out of them.
A UNION SHOULD BE STARTED BY ALL CONTRACTORS. AND RALLY FOR THE LAWS TO PROTECT THEM.
PROTECT THEM
Hi Darlene,
That’s a great idea of a strong body representing contractors that don’t get paid by homeowners. Does anyone else have an idea, other than call them a union?
Cheers
I just had my most difficult customer. After completing work, going on three months, customer will not accept calls, emails etc. However has threatened to sue over the lien I placed on his home for 7100.00 for work performed.
Small claims only allows for 5000.00. To litigate will costs thousands more. As a contractor we have very little support or protection against unscrupulous homeowners.
However you never hear about this, only bad contractors! Any suggestions on how to proceed, short of legal action? Can I report them to any credit agencies?
After 20+ years in this business, we have strived to do quality work at fair prices, to create validity and dependability. We have NEVER taken advantage of a homeowner, if only the reverse were true.
It seems as though clients have become more unrealistic, demanding and just plain unwilling to pay for what they want. It is hard to not take some of their comments and actions as a slap at our professionalism..
That being said, we find that we are being held hostage for final payments on jobs, with unreasonable demands by self absorbed clients .”I need to have you do this” or “Yeah, I know it’s not in the contract but I need you to…”
FYI we do every job by permit, signed contract, we are licensed insured and have a great referral business. This does not insulate your business from clients who see a way to get more than they are paying for.
Hi there Marilyn…..You are right and this is what’s going on out there with lots of Homeowners. They are doing it to companies like yourselves, who have been around for years, are qualified with licenses and more. These homeowners don’t seem to care.
They want the job done fast, they want quality, but they want the lowest price. They also want you to do more work while working there than previously agreed upon, even though you did change orders. It does not matter to many how good a quality job you’ve done and how you went out of your way to make it a good customer experience, its at the final payment time, they try to discount you.
Suddenly at that time these very same homeowners who were nice, suddenly can get nasty and find mysterious complaints of why they cannot pay you in full or “I thought this was part of the price” At that time they are willing or threaten to post bad reviews online about you as a contractor.
While these online “find a contractor” web sites can be really good at driving business to companies and we know of many contractors who’s main business comes from places like HomeStars, the downside is many homeowners are starting to use these sites to their advantage and at the last moment use them to re negotiate or ask for discount, while threatening to discredit companies.
IT’S RANSOM ….CONTRACTORS are being held to RANSON as far as I’m concerned.
Would it not be nice if these very web sites allowed contractors to post reviews about their experiences on homeowners and who to avoid! That would be something, that would be fair. “So if you threaten to post something negative about us, as a way of trying to get a late discount” then I’ll post one about you”
Are contractors concerned about getting future repeat business from a homeowner who’s trying to rip them off? Are they concerned about the lack of referrals from them, especially great is when these homeowners tell their friends and referrals on how to rip you off at the last moment.
I personally don’t want future business from people like them or from anyone they might refer me to. There are enough headaches and dangers out there being self employed and running a business. We don’t need more.
CARAHS pushes “What the homeowner should know” to all its member contractor, as a way to trying and stop these kind of practices.
Maybe tell homeowners who try this trick at the last moment by saying: “Your to discount my work will remove our 2 year…200% special quality of work guarantee” Maybe saying something like this will give them something to consider and they’ll back off!
What do others think? Let us know if you are also seeing this situation happening.
In the meantime, thanks again Marilyn.
Cheers
Alec
CARAHS Toll free 1-866-366-2930 http://www.carahs.org
I have been a renovator for 37 years now and every once in a while i find this type of thing. A few weeks ago I was to start a shower at a home in Mississauga. It was simple, remove the the old tile and drywall and redo with concrete board and then tile and grout. terms were $200 up front the rest at the end. I had a feeling so I got it all on paper with their signature on the estimate form. After I tore the walls out and made the shower unusable I asked for my $200. The home owner said he didn’t get paid till Friday and could he pay me then? I said absolutely. Packed up my tools and was leaving. I told him to call when he got paid. He has never called.
Everyone tells me Mike Holmes this and Mike that, This is the reality of contracting not what they see on T.V. There should be a show called,”I’m not Mike”.
On the flip side of this; what can a homeowner do about a contractor that has been paid everything, except the 10% hold-back, yet refuses to address deficiencies, and complete contracted work.
When pressed on outstanding work, he then places a lien on the house, trying to force payment of the 10% hold-back?
I just had the most horribly evil client, (name edited out) in Montreal, Quebec. He quietly refused to put any part of the contract in writing saying that “he just didnt have the time”. His wife seemed like a really nice person, so against my better judgement I proceeded with the job. Of course the “little refresher coat” paint job turned into a month long nightmare restoring what turned out to be a completely water logged and mold infested house. (name edited out), who also seemed very nice before turned into a completely different person during the course of the work. Making ridiculous demands and making criticisms, he screwed us completely, turning almost demonic once it came time to pay. From now on no matter what get the contract signed before you begin and the 1st payment on the 1st or 2nd day, no exceptions. There is nothing to protect the honest contractor, somehow everyone thinks that we are criminals?
I was ask by a so called friend and neighbor that I have known since elementary school to tear out a 12×21 kitchen floor that was rotten because the house never had a moisture barrier put under it , I removed everything in the kitchen including bottom cabinets tore out floor rebuilt floor put linoleum down and started on cabinets , ask for some money and they haven’t spoke to me since that was 3 yrs ago told them not long ago I was taking them to court and week later woke up that night my house was on fire started in my open carport luckily I woke in time to put it out bout 4000 in damages 2 weeks later woke up 3 in the morning and a 40×40 building full of antiques and things that were past down thru my family from my parents greatgranparents , and lots of homebuilding supplies that I have accumulated over the past 25 yrs of doin this type of work burned to the ground 150,000.00 loss ! The so called law here would not even come out and make a report ! I Quit !
Is there a form or site where as contractors can post these deadbeat home owners to warn others from doing work.for them I was ripped off doing a roof they supplied materials I supplied labour they never paid went to the company I worked for threatened them of tarnishing there name few of us got fired for giving this guy a great deal on getting his roof done
We need a system that can defend the good VCs
I did a job for a guy who wanted to sell his house because he already built and moved to a newly constructed one.
I built him a laundry room, parted the electrical room with a wall, and door, and boarded the ceiling and vinyl flooring. I also removed his 2 rooms’ ceilings which had tiles and installed drywall. During my initial visit, I told him about installing pot lights and a new switch to turn off the closet light. Since the house was really old I was unable to do the switch part as I am not qualified to do so, I told the client that can keep $250 from my final lay part. He brought in a master electrician who told him that his electrical including the fuse box needed an upgrade and it was about to blow. So this electrical problem was somehow fixed partially and was irrelevant to my assigned task. It cost him $1209+ but he kept more than $550 instead of $250. I left him and he kept my vacuum ($150) worth. So today, out of nowhere he messages me through my website by saying”I hope and wish you get nowhere in life! You are a scam artist.”
I took his job to help him. The first week he was so appreciative and complained about how other handymen and GCs screwed him and that he was lucky to find me. He even told me he and his wife are expecting a new baby and that he appreciated my skills and work quality daily when he was there.
His house was for sale and I told him about a lean on his home, but then my wife said it was fine and we felt bad for his previous losses and their situation.
Since then, I have become very alert and selective in choosing my clients. I do believe it is good on either side but such filthy people should face consequences for their evil deeds.
I never cut corners since it is against my belief and unethical, but bad people will always be evil.
Jawad
Toronto, ON