To lend money to this project manager?(113 Posts)
I feel I need to give the obligatory disclaimer - am a regular but have name changed for this. I'm also going to mention specific amounts of money as it might help people give me advice but I know how that usually goes down on here. Let's see anyway...
Oh, and in AIBU as it's a bit property, a bit legal and a bit financial so wasn't sure where to put it.
Here goes. I'll try to be brief:
- We started an extension in July. We're using a project manager who subcontracts the work out to a builder. We paid him a deposit which he passed on to Builder1. Builder1 did a runner with the money. He therefore got in Builder2, who has been great so far.
- We're very nearly at the end of the project, probably 2.5 weeks to go. PM comes to us and says he can't get the money back from Builder1 so can't pay Builder2 for the rest of the work. If he can't pay Builder2 by Friday he'll down tools and go off to another job.
- He therefore asked if we could loan him the money to finish the job, and he'd pay us back when he's got it back from Builder1, or more likely when he's got another project which he can collect a deposit from.
- If we didn't loan him the money, then our project would have to be finished by someone else at a later date, probably well into next year.
- The amount we would need to lend him is £12,500. The total project was originally meant to cost £72K, so it's a significant increase on top of what we've already paid him.
- We can just about afford it but that is money that was put aside for other jobs around the house so we'd be living in an unfinished house for longer than planned. We'd at least have a working kitchen though.
- We've lived in the house throughout the project (apart from a week at half-term), and living on a building site is starting to affect my mental state. I'm eating pretty unhealthily so have put on weight, can't have people round, dust and mess everywhere etc etc. I recognise that in the short-term, time shouldn't really be a major factor as we'll be living here for at least 10-15 years, but the sooner we can get the job finished, the better.
- We've done a rough estimate and think that if we end up having to get someone new in to finish the remaining jobs (some of which is making good the damage caused by this project), it would cost quite a bit more than the £12.5K, and would take much much longer. We like and trust Builder2 to finish the job to a good standard (as long as he's paid by PM of course).
- In the PM's defence, he was very apologetic and embarrassed by the situation but said he had no option but to ask us for help.
So the questions are:
- Would you lend him the money if you could?
- We'd obviously want something in writing (for what it's worth). Is there any form of contract or loan agreement that would protect us further down the line?
Gosh, these posts are always longer than you think! Really appreciate any advice / opinions on this - I'd normally speak to my parents but don't want to worry them at the moment...
No. I wouldn't. You won't get it back. You may as well pay Builder2 direct.
I'd actually be inclined to take PM to small claims court over the 12.5k - he can pursue Builder 1.
money lending is a regulated activity. You should not be doing it as you are not regulated by the FCA - you will have real problems with recourse if you do this and he cannot get the money back or just simply doesn't pay you.
don't be giving him any money. he needs to borrow from a bank if he needs the money for his business purposes.
I presume from you contract (review it) that it is his problem that builder 1 has defrauded him, not yours.
i would if possible pay the second builder myself .
i wouldnt trust that the project manager wasnt ripping me off.
i would also wonder why they gave such a huge amount upfront and why they dont have insurance to cover shit like this and why they havent already gone after builder 1.
i am cynical though.
No you shouldn't - and he shouldn't have put you in this position by asking you. What if he never gets the money back from Builder 1?
He's the project manager. This is his problem, not yours.
No way he should take a directors loan from
His own company. He is saying he will pay you back when he gets from builder one who has already done a runner. So if he doesn't get it back it means you don't get it back.
I’d have sacked the PM after builder 1 did a runner with the money
Is there any outstanding money to be paid to the project manager on completion? Could you use the £12.5k as an advance against that?
I would pay the money to get the project completed, but not sure whether I would lend the money to the project manager or pay builder 2 directly and agree a refund of the project manager's fees by the amount paid to builder 2.
Whatever you do, get a contract drawn up to reflect the amount owed.
Builder 1 running off with the money is between pm and builder 1, nothing to do with you. It’s up to PM to deal with it.
If I saw this post I'd respond as you all have too!
Yes, it is definitely PM's problem to sort. He mentioned taking Builder1 to court, although we didn't ask for details. But I don't get the impression he's started any formal proceedings.
It's only our problem in that Builder2 would need to move on to another job and we'd have a half-finished house until well into 2018.
If we paid Builder2 directly, we would still be owed money by the PM because it would take us above and beyond what we should have paid in total. It's the PM that owes him the money, not us.
If we pay the PM then we'd get our kitchen finished and in theory, get the money back eventually. If we pay Builder2 directly then we'll never see it again.
DJBaggySmalls if he doesn't get the money back from Builder1, he would have to use the deposits he's received from other projects to pay us back.
We had recommended him to a friend of ours, but contacted her as soon as we found this out to let her know not to use him. We couldn't have her in the same position, we'd be unwittingly creating a pyramid scheme!
Just doing some research on notary publics and personal loan agreements now so we at least have some protection.
He’s not going to get the money back from builder one.
If you do give him the money consider it a gift as you will never ever see it again.
What do you owe PM on completion?
What is Builder 2 owed?
He is not going to get the money back from Builder 1, incidentally. Ever.
I'm in the middle of building work myself, so understand completely and from the inside what you say about needing to get the house finished for your mental state.
I think you need proper legal advice, but I do have a question: why do you think the PM wouldn't pay you back once he'd pursued Builder 1? Presumably you could come to some legal arrangement where he signs an agreement that he owes you the missing money, and then you could pay builder 2 directly to keep the work on track?
I would also say that if you have to wait longer, I would think seriously about doing that. I think Christmas is a bit of an artificial deadline in the building trade - everyone wants everything perfect by then, but sometimes it doesn't work out that way. £12,500 is a lot to sacrifice for the sake of a few weeks of sorting something out. Think of the amazing family holiday you could have with just half of that money to make up for things being half-done over Xmas.
Smiling we're pretty much paid up for the project itself. There's less than £2K still to pay. So this would all be on top of what was in the PM's contract.
Streetlife I suspect you're right, but of course I'd rather it didn't come to that. I'd very much like that money back!
I'd pay builder 2 direct and let the PM worry about builder one. The word lending doesn't sit well with me
Thanks whisky, I think you're right about Christmas - we could just go to my mum's on the day itself, that's not such a big deal. It's more the fact that it took us months to find a builder in the first place and I don't want to go through that again, while the house is in this state. It's very much an emotional decision.
And if we don't pay this amount now, we're fairly sure that we'll end up paying even more to get a new builder in to do the unfinished jobs PLUS some fairly major remedial work which Builder2 would have done as part of the project. So we wouldn't have the £12.5K in our pockets anyway.
My only hesitation about paying Builder2 directly is that it then becomes a three-way agreement, which complicates things. My interaction has just been with PM so far. It's PM that owes him money. This is all compounded by the fact that Builder2 needs to be paid TOMORROW, so we feel really under pressure. I realise that on paper it looks like the perfect scam. FFS.
And sorry all as my OP wasn't clear on this - I've paid PM nearly ALL the money owed, bar about £2K. If I pay Builder2 I'm still out of pocket!
Why doesn't he just get a commercial loan? And why hasn't he got the money back from the first builder yet? Unless he has already take builder 1 to court I really don't think he has any right to ask you for more money because he hasn't been chasing the money proactively. And what about his cut? Surely he is taking a reasonable sum out if the 72k for his work? Seeing as he screwed up, he should be the one to pay for it, not you.
Get thyself to a lawyer (or Citizens' Advice), and get some advice. £12.5k is a load of cash. I think you need to drop everything to figure out where you stand, because this is a really important moment and it sounds as though the contracts need to come out and be looked at by an expert. Get this posted in Legal as well!
I don't think a 3-way agreement is necessarily more complicated - the question is, how do you best protect yourself here? My instinct says that you have a contractual arrangement with the PM and he is in breach of that. Whatever happened/s with builder 1 is not your business/fault/concern. That's why you hired a PM in the first place, right?
Also, bear in mind that builder 2 may still return to your job in future, even if he has some work inbetween. Have you spoken to him directly about this issue and asked him what his timescales might be? Downing tools for a week is not the same as for 3 months.
Hagueblue is a lovely colour, btw
Do not lend the money. This is the PMs issue
And yes, it does look like the perfect scam doesn’t it.
pay the builder directly at the absolute most DO NOT ‘lend’ anyone any money!!!
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