Deadbeat homeowners who refuse to pay

scam alertArticle by Alec Caldwell

Last week I looked at how online referral companies can be a great way for renovation contractors to get new business. However, it’s worth noting that obtaining business through this method can still cause headaches for contractors!

It seems that some homeowners hiring contractors from online web sites have an end game plan hidden up their sleeve called: I’m not paying you!

These “I’m not paying you” words are normally delivered right after the contractor requests the final payment for the completed job. Then, no matter how hard the contractor tries to resolve the recently-discovered issues, payment is still not forthcoming. It’s at this stage that the homeowner plays their final (pre-planned) card by threatening to post their new-found grievances against the contractor on the online referral company’s web site. A post like this can well affect future business coming through that site to the contractor, either by reducing any ratings they might have worked hard to achieve and/or by warning other prospective new homeowners to beware of  them. It’s all part of the plan by these unscrupulous homeowners. And it’s time to expose this situation.

If contractors decide their back is against the wall, they might decide to hire a collection agency to finally collect their hard-earned money. At this time, stage two of the homeowner’s plan kicks in: A simple cease-and-desist letter from a lawyer will stop these agencies dead in their tracks. The only option left is to take the homeowner to small claims court. But the contractor is in a no win situation by now: The collection agencies cannot represent them but still expect their lion’s share of any settlement made against the homeowner. Then if a settlement is finally made in the contractor’s favor, some will find ways not to pay on the judgment against them.

One contractor recently told me he has incorporated a new system into his work week, to try and weed out these delinquent homeowners.  He now employs someone to call the homeowners he is doing work for on a weekly basis. The idea is to ask the homeowners some pre-arranged questions about the job – do they have any issues and are they satisfied up to that point on the way it’s going?

It’s really about making a paper trail for yourself in case it’s needed as proof later. And in the process you might weed out these bad apples ahead of time.

Tell us about your experiences about homeowners who have refused to pay you for whatever reasons and what their excuses were!

Email: alec@carahs.org

Toll free 1-866-366-2930

READ ARTICLE AT: Canadian Contractor Magazine

 

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