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socrateaser
socrateaser, Lawyer
Category: Legal
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Experience:  Retired (mostly)
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A General Contractor does not show up to work because owner

Customer Question

A General Contractor does not show up to work because owner does not want to pay for GC markups, yet all subs are paid. The project is about a month from completion. The owner has been paying the subs directly for over a year, due to GC mismanagement of funds. Again, all subs are paid to date. The owner has taken management over and is completing the project for the GC.
What can the GC do? What are his rights? Can he stop the project in any way? Can he get in the way of final inspections?
Submitted: 9 months ago.
Category: Legal
Expert:  Barrister replied 9 months ago.

Hello and welcome! My name is ***** ***** I am a licensed attorney who will try my very best to help with your situation or get you to someone who can. There may be a slight delay in my responses as I research statutes or ordinances and type out an answer or reply, but rest assured, I am working on your question.

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Is there any written contract that sets out the terms of the job and what each party's obligations are?

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If so, is it safe to assume that the GC is in breach of the contract?

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Are any required permits pulled in the name of the owner?

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thanks

Barrister

Customer: replied 9 months ago.
I need a lawyer that knows construction law. Can you have one respond to this thread?
Expert:  Barrister replied 9 months ago.

I am a licensed attorney who specializes in real estate law, contract law, and have also done my fair share of construction, development and zoning law.

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I don't know if JA has an actual "construction law" category, but I am happy to opt out and open the question to other attorneys to see if any can assist you better...

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thanks

Barrister

Expert:  socrateaser replied 9 months ago.

Hello,

Different contributor here. Are you the owner or the GC?

I need to know your situation, so that I can provide a useful answer.

Customer: replied 9 months ago.
Great question. I'm a GC, yet hired as the owners' rep to finish the project by running the GC as he has not been performing.
Expert:  socrateaser replied 9 months ago.

Okay, thanks. From your answer, I assume you're supporting the owner's position in the transaction. That said, you asked:

What can the GC do? What are his rights? Can he stop the project in any way? Can he get in the way of final inspections?

A: Under irrefutable principles of contract law, where a party to a contract fails to perform, the other party is released from any further obligation to perform the remainder of the contract. Thus, the owner, in your scenario, having suffered a breach of contract from the original GC, no longer has any obligation to perform under the contract. Which means that the owner is free to hire someone else to complete the project.

The original GC can sue for "substantial performance," and assuming that some benefit to the owner can be proved in court, then the owner would be liable for that portion of the contract that was performed prior to the GC's breach. If the GC's breach was such that no benefit was ever provided to the owner, then the owner would be found not liable for anything under the original contract.

The GC can record a lien against the owner's property. But, if the GC tries to foreclose the lien, then once again, the GC must prove the benefit to the owner, in order to obtain a judgment against the owner. Otherwise, the GC loses.

If the GC records a lien but doesn't sue to foreclose within 90 days, then the lien expires, and that's the end of the GC's lien (though the GC could sue the owner without a lien -- it's just a lot harder to collect).

The owner could also complain to the CSLB that the GC failed to perform and this cost the owner money. If proved, the CSLB may revoke or suspend the GC's license. The owner could also sue the GC's bonding company for damages, up to the value of the bond (usually $12,500), if the GC has caused actual out-of-pocket damages to the owner.

I think that about covers the issue.

I hope I've answered your question. Please let me know if you require further clarification. And, please provide a positive feedback rating for my answer -- otherwise, I receive nothing for my efforts in your behalf.

Thanks again for using Justanswer!

Expert:  socrateaser replied 9 months ago.

Hello again,

I see that you have reviewed my answer, but that you have not provided a rating. Do you need any further clarification concerning my answer, or is everything satisfactory?

If you need further clarification, concerning this matter, please feel free to ask. If not, I would greatly appreciate a positive feedback rating for my answer -- otherwise I receive nothing for my efforts in your behalf.

Thanks again for using Justanswer!

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