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...