Collecting Payment from a Dishonest Homeowner – Updated

It won’t be a surprise to those of you who’ve been in business for years that some of your clients aren’t always honest. A contractor who attended one of our classes seventeen years ago, and is still making good use of the information we provided, sent a note about a problem client:

Hi Michael,

I attended one of your seminars in 2000. Your information has really helped our company over the years…especially pricing jobs and marketing. I look forward to your emails every week discussing aspects of the construction industry.

We are a small paving company . . . We specialize in driveways – asphalt, concrete, & paving stones.

We do many asphalt driveway repair jobs. This is where the cracks, holes, and depressions are patched with hot asphaltic concrete or asphalt crack filler, and an asphalt seal coat is applied over the entire surface. Asphalt driveways should be maintained like this every 3 to 5 years to keep them in good shape.

We’re having a problem on a job we did last week. It was patching & sealing a shared asphalt driveway. There were 2 homes involved, and we had separate contracts for each. The total amount was about $5,800. One owner paid her portion (about $3,200) on the day the job was done…as specified in the contract. She was satisfied . . .

The other owner is disputing the job. His portion is around $2,600. He claims the patched cracks look “grooved”…especially where asphalt crack filler was used. We told him they are settling, and it is natural. The contract states the cracks are not guaranteed from settlement…and we also discussed this with both of them prior to starting the job.

We met all the parties yesterday on the job, and he was adamant about not paying.

I am very pleased with the job. It looks great for a repair job. It received 2 coats of pavement sealer. One coat is normally done. They complained about the cracks settling…or appearing “grooved”…after the first coat, so they were filled a second time at no charge. Photos & the signed contracts are attached.

We haven’t gone to small claims court in over 25 years, but we’re headed that way. The owner in default is bold and defiant. He was a engineering professor and retired early. He has threatened to have his nephew, an attorney, handle the matter.

One other issue the owner in default has claimed is his elderly father (who owns the house), tripped and fell on a water hose our crew left unwound on the front walkway. He had some bruises, but nothing serious. No one saw him fall, so we are suspicious if it even happened . . . So far, the owner in default hasn’t made this an issue…but was very angry when it happened.

Could you review our case and the signed contracts to offer an opinion or advice? Please let us know your fee.

My response:

You don’t need my help on this one. Our clients run into guys like this all the time. They just don’t want to pay and that is the bottom line. He is dishonest, has no doubt done this to other contractors and is trying to improve his property at your expense.

I don’t know the laws in California, but if you file in small claims court in most states, that stops any participation by attorneys. I would check on that one. He might be just trying to bluff you.

I would file in small claims court and the sooner the better. Be sure you have good pictures and a note from the other person (of the two you worked for) saying they are happy with the job. You might also ask them if the lines and grooves are a problem to them. You might also get some pictures of four or five other jobs that have the same issues and that the owner was happy with your work, and gave you a thank-you note. File those with your claim in small claims.

You could also (if you haven’t already) send a notice of intent to lien. I don’t know what your wait period is in California, but file a lien as soon as you can in case you can’t resolve the issue in small claims court.

Forget trying to be a nice guy. If you want a friend, buy a dog. This SOB is just plain dishonest. You need to deal with this and the sooner the better. Ask him once more to pay you and if he refuses, tell him you intend to take such action as necessary to collect and then cut it off. Don’t tell him anything else, let him wonder what you are going to do. Put some knots in his gut.

I realize I got a bit heated in my response, but I get tired of hearing about dishonest building owners. The last thing a business owner needs while trying to run a construction company is a bully trying to cheat them.

How do you prevent it? You can’t prevent it all, but there are things you can do to lower your risk.

• Read your contract to them, top to bottom, before they sign, and stop frequently to ask if they have any questions.
• Use a payment schedule, detailed in your contract, that keeps them paying for the job as you go along instead of you financing it. For more on payment schedules, see here and here.
• Stick to your contract like glue. Do what you say you’re going to do so you can insist they do what they’re supposed to do.
• Document your jobs; take a lot of before, during and after pictures.
• Send a Notice of Intent to Lien, or whatever the document might be called in your state, on the first day of every job. Be sure to explain it to them when the contract is signed so they aren’t surprised.

Following those steps warns the shysters and flakes that you’re serious about your business. If they want to argue about or delay a payment, they are on notice that you’ll go to battle if necessary. If they refuse to sign a contract with those terms, be thankful and move on.

“The trust of the innocent is the liar’s most useful tool.” — Stephen King

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Update Received April, 2020

We received this note from the contractor:

We won the case in small claims court (SCC) back in November, 2017.

The jerk filed an appeal afterwards. We won that in March, 2018. The appeal judge let both parties know his decision later the same day of the trial. This was unusual, since it normally takes a month. I could tell we won the appeal during the court proceeding. The judge had enough of this guy and his lawyer. (In CA, lawyers are NOT permitted in the first SCC hearing. If the defendant loses and files an appeal, they are permitted.)

He finally paid a week after the appeal…after going back & forth with our lawyer. He then wanted his credit card payment returned so he could charge it to a different one. Our attorney didn’t respond to that, and questioned if this jerk thought we were stupid.

We didn’t have to pay for our lawyer. Our liability insurance furnished one at no charge, since the other party claimed his elderly father slipped and fell over a water hose we left unwound. (We contested the water hose issue, and they dropped it halfway through the appeal.)

The jerk did get some revenge…although dishonestly. He left about 4 – 1 star reviews to both Yelp and Google on our business…8 total. He used different email addresses and names to do it.

Our Yelp account has somewhat recovered. Google has not. Our Google rating went from 5.0 to 2.7. Yelp and Google make it impossible for any business to challenge dishonest bad reviews. Those companies are scams…just like you’ve said in the past. They do not treat small businesses fair…yet make a fortune because of us.

Thanks again for your advice. You were right.

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