Ask anyone who has done a remodeling project and they will tell you two things. First, it almost always takes longer than projected. Second, it costs more than budgeted. But one of our viewers says it appears she is going to have to pay some of her sub contractors twice. To make matters worse, she says the law isn't going after who it should. Her story and what I found for her are the subject of this Fact Finder.
A handwritten note was a contract for the $29,000 garage building job between Jola Pepellashi and Bassett Point Construction. Pepellashi says she gave Gary Bassett $20,000 dollars up front for most of the materials and some sub contractors. But half way through the process, the work stalled. Peppellashi fired Bassett, and paid someone else to finish the job. Pepellashi says "when all is is said and done, this project will have cost me at least $43,000."
But it might cost her more. Peppellashi learned Bassett never paid Leelanau Redi Mix for the concrete. Redi Mix has now filed a lien against her. Pepellahsi says "I couldn't believe it. I felt frustrated. I felt like I have been conned." So she called the sheriff. A deputy interviewed Mr. Bassett, and according to a police report Bassett admitted he used "money allocated for her garage and concrete for other projects that were not Pepellashi's." According to the report, Bassett said he probably owed Pepellashi between $12,000 and $14,000. He also "openly admitted that he was in the wrong" and when the deputy described his actions as stealing "he eventually agreed with the definition." I called Gary Bassett to get his side of the story. When I asked about his apparent admission in the police report, he denied ever speaking with any deputy about the situation.
You may be asking isn't this against the law? Pepellashi sure wondered. I dug a little deeper and a 1931 Michigan law says it may be a felony for a contractor to use any money paid to them for any other purpose than first paying their subcontractors, suppliers and laborers. But Prosecutor Al Schneider told me he didn't criminally prosecute for the following reason: "As we find in some of these builders trust fund cases, the criminal liability is clouded, if not overwhelmed by the non-criminal claims of the parties. When that happens, we decline prosecution to allow the parties to resolve all their claims in one forum. We must also keep in mind that failure to pay laborers, material providers, and subcontractors is only prima facia evidence of an intent to defraud, not proof beyond a reasonable doubt."
Now, Pepellashi could file a lawsuit, but her lawyers say it will cost thousands of dollars in fees. She fears Mr. Bassett can't pay anything if she does win. But there are two things she can do to try and at least clear her name and possibly get the sub contractor's lien removed. First I got her the paperwork to file a complaint with the Department of Energy, Labor and Economic Growth. They will investigate, and could rule that the contractor needs to pay restitution. If that fails, she can also file an affidavit in court when the lien is foreclosed on. It could show the court that she paid the contractor, and he failed to pay his subs. If that is successful, the lien becomes the contractor's problem not the homeowners.
Pepellashi admits she made mistakes in this process that she wants you to learn from. Here is what experts say she should have done. First, do your homework when hiring a contractor, check references and court records. Second, get a thorough detailed contract in writing. Finally, as the project progresses ask your builder for incoming bills, and copies of receipts for one's that have been paid.
So what do you think? Have you had a construction nightmare? Tips for other homeowners? Should criminal charges have been filed in this case? Please leave a comment below.
