We Have To Go to Court
TL;DR - Our general contractor and subcontractor are in litigation for $21,268.20. We were the customer of the general contractor and are the owners of the property where the subcontractor did his work. So we have to testify in court to provide more information.
This is the reality of real estate investing and really…
Life in general.
Sometimes, things just happen.
For this story, we happen to be wrapped up in the middle of a dispute between a general contractor and a subcontractor.
But how did this happen?
What’s the story behind why we have to go to court?
From successful kitchen remodel to $21,268.20 in litigation…
What went wrong?
We Have To Go to Court
This Can Happen at Any Property
The intent here is to illustrate a real-world example of what happens when you deal with real estate.
This story is applicable to real estate and real estate investments in general.
When you buy property, you’ll find yourself in situations where you have to do rehab work:
Small rehabs
Cut rehabs
Bathroom remodels
Kitchen remodels
Etc.
This story is what recently happened to us…
This is why we have to go to court.
The Details
We bought this property.
When we did, the kitchen was original. We weren’t fans of how it looked, so we had to do a complete kitchen remodel.
Which we did!
We engaged with a general contractor that we reviewed, scoped out, and did our due diligence on through the internet.
We:
Got referrals
Got references
Looked at past residences that they had worked on
This particular company seemed very promising and professional during the whole duration of the project. It was great!
It took 4-5 months to do the total remodel of the old kitchen. This includes demolition, building the new kitchen, everything.
Things like:
Getting material
Tearing down a wall
Fixing up a ceiling
Getting permits from the city
Getting labor
How General Contractors Work
The general contractor is the project coordinator. They coordinate construction projects for us.
In this case, it was the kitchen.
They go out and find the labor (specialists) for electrical work, framing work, demolition work, kitchen work, or whatever you need for your project.
Our general contractor subcontracted out the kitchen project on our property to one subcontractor.
This subcontractor worked from time to time with 1-2 other people to do all of the work.
And they worked on the kitchen project until it was done 4-5 months later.
Everything was good. Throughout all project milestones, we paid the general contractor with checks for different bodies of work they completed throughout the project.
Phase 1: 10k for this
Phase 2: 15k for that
Phase 3: 8k for that.
You get the gist.
The project went great and we were super happy with the results.
We cook in our kitchen all the time!
After the Project’s Finished
But then, a year and a half ago…
Or 3 to 5 months after the project was over…
We get text messages from the subcontractor — the person who actually did the work for our project.
He asks us if we paid the general contractor.
The job had been done for a while, but the general contractor still hadn’t paid the subcontractor for the last part of the job.
We confirmed that we had paid the general contractor.
Then, we reached out to the general contractor asking if everything was good and if they needed anything else from us.
We were confused because the project was over and everything was paid for.
We raised our concerns and that’s when the general contractor came back and said:
“Well, we’re discussing things with the subcontractor. There are still some receipts for materials they bought that they haven’t provided. There are also some hours that we have discrepancies for. There are a few things we need to iron out with the subcontractor. We want to sort this out and have an ongoing conversation.”
That was that. We figured that they’d solve this issue.
Left on Read
Later on — for a totally unrelated project — we texted the subcontractor again a few months later.
We were wondering if he had any availability to do a small project on our property.
He never got back to us which was very odd. He’s normally very chatty and vocal when he was looking for more work.
Didn’t think anything of it.
Waited a few more months. Nothing happened.
Still loving the kitchen.
The Summon
Yesterday, I went to the mailbox. Had a letter from the State of California Department of Industrial Relations waiting for me.
And I pull it out and open it. Seems odd, so I’m curious.
All that is defined is that — basically — the general contractor and the subcontractor are in litigation for a total amount of $21,268.20.
Because we were the customer of the general contractor…
And are the owners of the property where the subcontractor did the work…
We’re a part of this case and complaint. We’ll have to testify in court to provide more information.
We don’t know the outcome of this yet. We’ve paid everything so we’re not personally concerned.
This is a problem between the two contractors.
But because it was done on our property, we’re getting dragged into it all.
Be Prepared
Stuff like this happens in real estate and construction.
That’s why you should be ready for it to happen to you.
If you get into real estate, you’ll have disputes like this that can happen from time to time.
And the frequency of them only increases as your real estate portfolio does.
You’ll need work done on one of your rentals — or you’ll want it done.
Regardless, you’re the property owner where a project’s being done. So you’re involved.
If you’re in this situation, don’t freak out. It’s normal!
As long as you’ve paid properly and handled everything on your end, you’ll be on your way to success.
Happy Hunting!
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