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Bank is making bad situation worse (long but w/pics)

ehoops
16 years ago

I shared our building nightmare a while back. Basically our builder stopped working on our job mid Sept, left us with approx 100,000 in outstanding material/sub costs, then closed his business down. We talked to our bank and attempted to convert our const. loan to owner builder. Bank said No, we MUST have a licensed contractor. Thankfully, we have a contractor friend who is willing to finish our project as a consultant so he will be our contractor of record for the bank. So....our new hurdle is that our bank will not move forward with our new contractor and will not release any draws until we provide them a document from our "old" contractor stating that he is no longer contracting our job and that we do not owe him any money. If the contractor says we owe him money our bank will require that we come up with whatever amount he says into an escrow account until we resolve our differences with the contractor. About a month ago the contractor provided us a document to try and justify why he thinks we owe him 25,000. It was a complete joke!! I asked for physical copies of the invoices he referenced in his document. In comparing the document and the actual invoice amounts they were "off" by 33,000. So if we stick with his method to determine who is owed money, he actually owes us 8,000. This doesn't even take into account the fact that in the invoices he's referencing he's marked up all materials and subs by 25% when we contracted that his markup "profit/overhead" would be 20%. Anyway, we met with a lawyer last week who suggested we first attempt nicely to point out the contractors accounting errors (like we've done sooooo many times) and explain to him that in order to remove him from the bank loan, we need a document signed by him stating that we owe him nothing and that he is no longer on our job. The laywer feels we have a very strong case against the contractor but he's suggested we tackle the house first and then decide if it will be worth it to go after the contractor.

I am so frustrated. I can't imagine the contractor will "do the right thing" and provide us with the document for the bank. Until he does or we threaten him further we're at a complete standstill.

The small piece of good news is our front door came last week and is now installed. Too bad we can't pay the door company the balance until we get the contractor issues resolved to get a draw (door company's not too happy).

We do love the door, although privacy might be a bit of an issue. Oh well, I guess running naked throughout the house is no longer an option.



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