Legal Question in Construction Law in California

Inappropriate use of construction funds

I found out, and believe I can prove it, that the General Contractor building our house was using our construction funds to pay unlicensed subcontractors he had hired, (Which I believe is illegal in CA.), and also used the money to pay his mortgage rather than for needed materials. I then stopped his direct access to my loan and from then on insisted that I handle the disbursement of funds on receipt of valid invoices and for the use of properly licensed subs. Previously he signed for the stage payments himself. He now claims I breached the contract by doing this and has walked away from the job. He also provided us with false documents outlining where the money was spent. False because the suppliers he claims he paid our money to, have provided me with affadavits stating that they had not done any business with the GC at all, and provided no material to our address.


Asked on 11/18/08, 4:39 pm

3 Answers from Attorneys
Terry A. Nelson Nelson & Lawless

Re: Inappropriate use of construction funds

And your question is?

If you can't resolve it with him, you either walk away from the situation or file suit. IF he has any assets to collect against, which is in serious question these days, then the suit might make sense.

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Answered on 11/19/08, 5:26 pm
David Gibbs The Gibbs Law Firm, APC

Re: Inappropriate use of construction funds

I apologize if this sounds rude, but what's your question? I don't see any question in there. If the contractor is doing what you allege, then you took the right steps. I would strongly suggest that you review this matter with an attorney who specializes in contruction law, review the contract with them as you need to protect yourself, and even though you have started the process by requiring approval for draws, there are a lot of other potential pitfalls when the contractor is skimming.

*Due to the limitations of the LawGuru Forums, The Gibbs Law Firm, APC's (the "Firm") participation in responding to questions posted herein does not constitute legal advice, nor legal representation of the person or entity posting a question. No Attorney/Client relationship is or shall be construed to be created hereby. The information provided is general and requires that the poster obtain specific legal advice from an attorney. The poster shall not rely upon the information provided herein as legal advice nor as the basis for making any decisions of legal consequence.

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Answered on 11/18/08, 4:55 pm
George Moschopoulos The Law Office of George Moschopoulos

Re: Inappropriate use of construction funds

The general rule in CA is that unlicensed contractors work for free. You may be able to recover all funds which you can establish were paid to unlicensed subcontractors even though your General Contractor may himself have been licensed.

I recommend you contact a construction attorney in your area.

www.SoCalConstructionLaw.com

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Answered on 11/18/08, 9:40 pm


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