We often hear from contractors dealing with a client who, for whatever reason, has decided to change the terms of their contract. Architects have the same problem. Below is a note we received from an architect that outlines his experience with a dishonest client.
“I have been receiving your newsletters for a number of years and enjoy them immensely. . . . I am a licensed architect as well a general contractor. I do design-build on many of my projects. My contract for these project types are two parts – Part 1 Design, and Part 2 Construction drawing / Construction.
I recently completed design for a kitchen remodel. The customer signed my design agreement that stipulated an hourly compensation for my time. I completed the design scope; We met to review the design; and they were very excited to see the proposed design and the drawings. No fuss. After, I sent them the invoice for the services and they disputed the fact that I produced 3D drawings to communicate the design. They said that they did not want to pay me for the 3D drawing portion since the agreement did not say specifically I would be doing this, and they deemed them ‘unnecessary’.
I sent them a revised invoice giving them credit for the 3D portion. I did not have to do this but I thought they would then be willing to pay for the remainder. Not the case. Now, they don’t want to pay for any of my architectural services, except for the $1000 retainer that I had them pay when they executed the design agreement.
I was tired of talking with these people, so I had my half-brother (who’s an attorney) contact them via phone call about this matter. Supposedly, the customer got extremely mad and, among other threats and objections, threatened to ‘smear’ my name all over social media and report me to the Better Business Bureau if I pursued collections, and the threat of possibly taking them to small claims court to collect. They owe me $1800 ($2800 less $1000).
The customer supposedly spoke with another builder who said that the work should not have taken me this many hours (28 hours at $100/hr). The customer also claims that they had IKEA come to their house and it only took IKEA 3 hours to draw the cabinets. Of course, IKEA ‘mimicked’ my cabinet layout drawings to produce the cabinet drawings – an exact replica. It’s no wonder that it took IKEA less time.
Subsequent to me completing the design and providing them a preliminary construction cost, the customer went to the bank and discovered that the bank was not going to lend them the money necessary to pay for the project. Supposedly, they have too much current debt to payoff. I should have seen the writing on the wall when they told me that the initial design $1000 retainer would need to be borrowed from their parents.
My question for you: Have you dealt with this type of issue with other construction businesses? What are my options? I would normally take a customer like this to small claims to collect. I’ve been weighing the idea of collecting vs. abandoning the whole collection process vs simply writing them a nasty letter to humiliate them. My main concern: I want the money, but not at the cost of these idiots ‘smearing’ my name on social media with false information (I am not a social media subscriber) or the customer making a claim with BBB.”
Isn’t business fun? You meet a lot of great people, but every now and then you run into dishonest clients like these two. Threatening to smear the architect if he tries to collect is an ugly move.
It’s easy to say he should have seen the writing on the wall, but I don’t know how many would have seen this coming. The biggest red flag I see is having to borrow the $1,000 design retainer. It’s a sign that they might not have had the money to do the job. Now they obviously can’t find someone to loan them the final $1,800 and are stiffing the architect instead.
We hear about flaky clients often. These are often people who’ve cheated other business owners as well, and they know how to get away with it. It’s all a game to them, and if you own a business you must be rich, right? All you can do is try to recognize the warning signs before you go too far.
I suggested he speak with an attorney who specializes in construction law. The homeowners certainly owe him money, but it’s questionable how much he should spend to pursue it. I gave him the name of an attorney in his state who is a great guy and has helped other contractors we’ve sent to him.
It’s unclear whether or not this architect provided a copy of the drawings to the homeowners. Don’t ever release anything before final payment has been made, and don’t allow them to take photos of your design with their cell phone.
This kind of stuff (and you can spell stuff a lot of different ways) happens to almost every business owner at some point in time. When it happens to you, keep your time and expense to a minimum and collect what you can. Don’t go into a long expensive fight unless it’s worthwhile; the fight is a distraction you don’t need. Anger and regret will weigh you down and that will cost even more. Learn from the lesson, then refocus and move on.
The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses and their lives. He is the author of the books Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations.
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