Nightmare: Already paid builder running out of money to finish project - Advice Please(11 Posts)
This is a complete nightmare...
And a long story....
We found last year a fantastic award wining building company member of the Federation of Master Builders to convert our loft and refurbish our house. This is a tricky project and no other building company were interested.
This company has been founded and until now ran by a builder called X.
He showed us around some of the projects they were doing and we were really impressed.
We entered into a contract for design and build for £250k to be completed in 5 months, payable in equal weekly instalments as this is he told us how they did business and all their other clients paid. They provide their own architect and structural engineer.
The first few months everything went well but mostly demolition works took place. However we paid weekly...
Until the end of month 3 when we came back from holidays where we realised that the works were not progressing. We were told that the reason for the delay was due to the structural engineer not being available during the summer for family reasons and not to worry.
We finally got the drawings but then X told us early September that the company were now having some cashflow issues. He also told us that they used the money we had already paid to fund some other projects.
Desperate to get the project moving and still trusting the company (the work is really well done and all the team very professional) we paid a bit more for material and labour.
Now, 6.5 months on:
- the roof structure is finally done;
- we paid £182k in total so I estimate about £110 more than what we should have paid at this stage for the works
- there is the whole house refurbishment to be done and there is only £63k in the budget to complete the works
- it turns out that on 31st October the company stopped being a member of the Federation of Master Builders and the X resigned as sole director and shareholder of the company and is replaced by somebody we don't know (and I only found by doing a company check earlier today).
We are still dealing with X and is now telling us that:
- he has completely ran out of money and borrowing options;
- somehow the steel needed for the project is £35k more than as per contract;
- he wants us to pay for the works if we want them to continue (materials upon invoice and labour as per a daily rate) and his team is ready.
For the first time today there was nobody on site.
We are due to meet X and foreman on Saturday to discuss some solution. We don't want to pay more until more work is done.
- Would anybody has any idea how we can sort this? Assuming they are honest, is there a way for example where the company could borrow showing to the bank that if they carry out the work we will pay?
- how can we have any leverage on the company going forward given that we have paid so much already?
- can we take any sort of insurance against failure to complete / bankruptcy at this stage?
To make things even worse the company is a limited company, X is a foreign national and I have the strange feeling that he is trying to relocate abroad.
We have been totally stupid and foolish entirely relying on the previous experience of X and the company, word of mouth, the care they seemed to attach to their reputation.
We don't have the finances to pay for another builder to step in and finish the works... if they don't finish, I believe we are ruined.
This is is the worst nightmare.
Any help would be very much appreciated!!!!!
I haven’t got any advice but what a total pain for you.
I'm so sorry but I don't have any advice for you other than to seek legal advice. I really hope someone more knowledgeable comes along.
I feel sick for you. Get legal advice ASAP.
I'd get legal advice as others have suggested but, sadly, I think you are going to end up having to cut your losses. I would start by getting a surveyor or someone with building expertise in to assess what needs doing to complete the job for the least possible amount and take it from there. I'm sorry. You really don't want to hear this but, if he has protected himself personally by using a limited company and if there is every chance he could emigrate, there's not much you can do. How were you paying him? Was it, for example, by bank transfer to a company bank account? Did he every ask for it to go to a personal account? You may have some leverage if he did.
Get legal advice but also wondering if it is worth giving RIBA a call (assuming architect is registered) or Chartered Institute of Surveyors. Not to expect them to take up your cause and discipline anyone but to help you moving forward. A member of the latter may be able to act as a project manager for you going forward. I know budget wise you do not have any spare cash but that may be exactly why you need to appoint someone experienced and knowledgable. Trading Standards may be worth a call: they may have some ideas. Good luck!
If the contract is with the company as opposed to X, why are you still dealing with him? Surely the company should continue the work? Get to a solicitor and trading standards, and find out if the company has insurance that will get your project completed.
They have already told you they have spent your money on other projects? Wtf? At this point I would have got the contract out and sought legal advice. He is mis-managing your money. His cash flow problems should not be yours. Pay not one single penny more. It does sound as though he is about to do a runner. The company should have insurance. Act now to resolve this.
Nightmare. So sorry :-( I felt sick reading this.
Unfortunately I think your options for recourse are really limited. The company can just fold, the directors will just start a new company X2 and you’ll never get your money back. Potentially you might be able to prove they were trading whilst knowingly insolvent but that still won’t get your money back. That is the joy of a limited company structure.
Ultimately I suspect you’ll have to pay them invoice by invoice to get the job completed.
Whilst I would take legal advice it may be a struggle especially if X could leave the country.
I would get an independent surveyor to make sure what they have done is safe . Then see how far the 63k left will stretch , speak to another builder or possibly the surveyor may be able to help. Is the house liveable ?
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