Hire an attorney.

Do you have an architect?

I have seen this happen several times. If one of the subs has the proper license, he might be able step into the role of GC and take over the subcontractor contracts. Or, the subs might know someone who could do that. Then you would notify the building department and lender of the change.

You mentioned his employes. A GC normally hires subs to do most of the work with a small crew of his own. What is the nature of your contract and what services was his company performing? The new GC or you should find out if he has paid the subs and suppliers. Hopefully, he used your overpayment to pay their invoices and as a deposit for materials not yet delivered.

Ask a lawyer to discover the nature of the GC's business. Was he incorporated? Are there other corporate officers? Did he have a partner?

Getting money back for an overpayment might involve a claim against his estate which might take many months and only be a partial recovery. A lawyer would increase the potential for recovery.

I don't know in what way the GC was involved with your construction loan but as long as you can make the payments, the lender should continue to honor their commitment.

Good luck

There are many issues here and I think you do need to at least consult an attorney if there isn't someone immediately picking up the business. If you are correct that the workers have stolen the tools that's not a good sign (although the tools could belong to the employees or subs). You need to make sure the subs have been paid for the work completed or they will put a lien on the property (although that can vary by state). Construction-related laws are often to the benefit of the contractors not the consumer. In my state if you pay the prime but the prime doesn't pay the sub -- the sub can still put a lien on your property and you have to bring in the lawyers/courts to seek a resolution.

Mark, yes i do have an architect. Why do you ask?

JDS, the GC was supposed to use his own crew to finish up the foundation & framing but he passed away while starting to work on the roof. He had a very small crew who were helping him out but after his death they have stopped coming into work. The GC was the sole owner of the business. He did recently get married before his death(like a month ago) and I don't know if the wife has a say and/or option to fulfill the contract by hiring someone else. Do you know if the contract terminates after death or the wife has a choice to honor the contract? Ours was the only last job he was working on. I am going to consult with a lawyer to seek options for next steps. I think the 30 K is mostly the lumber & cement company that are unpaid and can lien the property if not paid on time.

StanZ, it appears the tools have not been stolen, they have been just been picked because it was sitting unused. I will see what the lawyer tells me.

We need to finish the project by the next 4 months so the clock is ticking on the construction loan. I wonder they will give me another extension because of circumstances. They have already given me two(the max they would give out).

Sushi even in the best of circumstances, if your GC were still alive, i strongly doubt you would have been finished in 4 months, if you haven't even gotten your roof framed in. It might have been a slight possibility with a production house by one of the tract builders, but not with a one off

As more details come out it becomes clearer to me you need to at least consult with an attorney to understand the laws of your state and the terms of your contract. If the house is just now being framed you would be on a tight timeline to finish in 4 months even if he was still on the job.

Make a record of everything you can and be careful what you say to anyone before speaking to a lawyer.

The obligations after death will depend on the contract, and the ownership of the business. This is a complicated matter and you don't have a lot of time to resolve it. Find a good lawyer quickly . I wish you luck.

I'm sorry for your experience. The answer to your questions are ones that would best be provided by an attorney licensed in your state with a background in construction/real estate.

Thank you for all your comments and support!

It's been a difficult build for us and I wish this stress came to an end soon. The contractor had general liability and workman comp listed for his license. I wonder if the new contractor who will take over would be more expensive(probably would) and if any insurance claim would pay for the difference in price. I guess these are questions for an attorney.

Here is an article that might help you if the GC ran his business as a sole proprietor (no partners and not incorporated). Its written from the perspective of the GC's surviving wife and the potential obligations of the GC's estate to you.

Get all of the project records together for the attorney including the loan agreement and payments; names of subs and suppliers; contract documents; communications and photos of the work. Write down anything you are told even rumors and say as little as possible to others.

Your architect may have experience in this matter and help you sort things out.

Check the Builder's Risk Insurance policy you took out as part of your build. Ours had a death clause for the GC in it.

An owner can be protected from a GC's inability to complete a project by a Performance Bond which is rarely included in a single family house contract.

Yes, that's what we had included (rider) in our BRP. We took out our own policyholders the build. $1400 gave us some additional peace of mind.

CSKI 13, I do have a Builder's Risk Policy from Zurich. I don't know there is such a clause in the policy. I would have to check with the agent. Is it typical to have it in the policy? I paid close to $1,900 for the policy.

JDS, i did seriously think about buying a Performance Bond before construction started it but all the brokers that i tried talking denied it for a residential home. It is more common for a commercial project is what they told me.

My policy was through USAA and we insisted on coverage on the GC to finish the build; he had to provide some additional info for underwriting the rider on the policy and it was an addition $1400 on top of the std BRP they offered, but as our GC did a lot of his own work framing, I was paranoid that he'd fall off a roof or come to some other disatorous end and leave our build in limbo. It must have been some sort of performance bond/rider. Check your BRP carefully and best of luck. Builds are hard enough to have to deal w/these types of challenges. Don't worry about seeming callous or being overly sensitive, however -- it's just business and you need to protect your interest and investment.

As I said earlier, it is rare for a performance bond to be required in a single family home contract. For larger projects, its more common but its sometimes waived by the owner because the bonds are so expensive. Performance and Payment Bonds are required for all Federal projects and most state projects.

Normally the GC secures the bond to guarantee their work and performance to the owner and the contract sum is increased by that cost. Therefore, the requirement for a performance bond is usually found in the contract and you would have been given evidence that it had been purchased by the GC. Just read the contract to find out.

The cost of a bond depends on the expected cost of the project and the credit worthiness of the GC since the most common cause of non-performance is bankruptcy. That's why its difficult for a small contractor to qualify for a bond.

I've never heard of an insurance policy that paid an owner at the death of a GC. How would the value of that risk be determined? Would the GC have to reveal his medical history and take a physical?

IMHO you'd be far better served seeking advice from legal counsel and not an online forum. Secured your executed documentation and seek counsel.

Ignore all online legal advice other than the advice to get legal advice.

I will be meeting with an attorney this morning. Thank you for all of your advice. Although I don't like the idea of meeting with an attorney and makes me squeamish every time I think about it, looks like I have no other option available. I am thinking about the stress this has put on my family and I want a resolution soon.

Its the unknown that is the most stressful so the lawyer should be able to help reduce your stress. It should be a relief to have someone who is obligated to represent only your interests take charge. Let us know how it goes.

Good luck Susha.

Best wishes to you as you get this matter resolved.

@JDS, yes, blood was drawn and a report from his Dr. based on the physical he'd had w/in the previous year was accepted in lieu of a new physical (as well as other UW docs) My interests were protected against any liens that unpaid contractors might have placed and there was a provision that would compensate for me up to a 25% increase in price if I had to get a new contractor to finish the job. There were some other protections, but those were the two that caused me to purchase the rider/bond or whatever.

Since these frequently outlive the need of the OP, this info (availability of such insurance) is offered for those who might be in the pre-build process where they are setting up such policies; hopefully OP took to her attorney all contract related docs, incl any insurance policies she might have on the build.

Just came back from the attorney's office and spent a good amount of time reviewing everything that has happened thus far. He said the contract is automatically cancelled as there is no contractor with a valid license(license just expired this morning) to fulfill everything in the contract. The wife can chose to get her own license to help complete and honor the remainder of the build but it is her discretion. The License Board should receive an application with that request and this could take months to get approved. He said most likely, it would be denied. I could chose to sue the estate to recover the money but did not recommend it(likely no money in it anyway). Bottomline, he asked me to cut my losses and move on and work my energy towards hiring a new general contractor. At the very least, i think he asked us to make a claim against the bond amount which is around $20,000. He believed that would be a good idea and probably would be a no contest sort of situation.

Susha,

I am so sorry for your experience, and so glad you were willing to share it with fellow Houzzers. I don't think it occurs that often, but the possibility of a contractor's death is a legitimate concern for anyone hiring a small or one-man firm to build their home. Hope that your bond enables you to recover fully any losses you've incurred and that the rest of your project goes without a hitch.

Here's another one from 2016. It does happen.

http://ths.gardenweb.com/discussions/3621503/contractor-died-suddenly?n=18

I've seen it happen 3 times. Its fortunate there was a bond in the OP's case. Time is often the most serious issue but lenders and building departments should be considerate if for no other reason than to avoid bad publicity.

We finally signed with a new builder and the new price is 22% more than what we have left in the bank to finish. It's crazy how different prices from 2 contractors could be. Of course its been two and a half years since the last builder bid this so i don't know if labor and material prices have jumped up so much. This builder says we will be done by the end of October, which is 5 months away.

I have spoken to almost 6 builders, other than I mentioned above and every single one says its too risky to even take up a project like this unless there is a large 20% contingency fund in the contract or clearances from the county for the work that is done so far. In situations like the one I am in i wished the county relaxed the regulations and grant some leniency.