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MarylandConstruction ContractPayment Disputes

We have a situation where we have paid out 112 thousand on a home improvement project on a 145k job. The contractor was terminated due to many reasons but primarily poor craftsmanship. When we were asked to settle the paperwork is so poor neither the contractor nor us as homeowners can come up with a number. What kind of professional can evaluate our case? Binding or non binding arbitration is not in the contract nor is there a mediation clause. We want to be fair, but no one can figure out what the 112 went towards. There also are 6 change orders to consider.

1 reply

Jun 21, 2019
I'm really sorry to hear about that. It must be incredibly frustrating that the situation has gotten to this point.

One option here may be to bring in an auditor to review the paperwork to try and make sense of it. While not extremely common, construction auditing can be useful when there are lots of questions as to where money has gone and what it has been used for. Another, more traditional, option might be to have a contractor agree to mediation. That way, documentation can be reviewed and negotiation can be instigated in order to come up with a fair resolution. As you mentioned above, arbitration could be another option.

However, as far as alternative dispute resolutions go, it might be hard to convince a contractor to undertake binding arbitration when it isn't provided for in the contract. An owner may need to coerce their contractor into doing that - but when the alternative to these methods is legal claims against a contractor, that contractor might be willing to resolve the dispute without getting lawyers (too) involved.

It's also worth noting that contractors are generally required to keep certain records and maintain proper accounting practices, so a contractor could be in violation of licensing rules if they've failed to adhere to required accounting practices. Threatening to report a contractor who's in violation of licensing rules could always be an effective tool to have them submit to a fair dispute resolution process.

Further, contractors are also required to uphold a certain level of workmanship, regardless of whether that's set out in their contract. So, when workmanship issues are also present, that might provide additional leverage to a property owner.

But, if a contractor is uncooperative and is being unreasonable about resolving a payment dispute, consulting a local construction attorney might be a wise decision. They'll be able to review the situation and put you in the best position for fairly resolving the dispute.
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