Contractor didn't complete work -- Threatens to file Lien

Assume the following is true:

An HOA hires a contractor to perform repair work.
The contractor agrees to do the work for $15,000 and to provide a three-year warranty.
The contractor require a $5,000 deposit.

One month later, the contractor states that he has finished the work and the HOA owes him $13,000.
(He wants an additional $3000 because he underestimated some of his costs.)

However, the HOA feels that only 80% of the work has been completed and does not want to pay him the additional $3000.

The contractor threatens that if he is not paid the $13,000 balance, he will not warranty his work, and will turn the bill over to collections and/or place a lien on the property.

The HOA would like to avoid having a lien placed on the property. The Board does not want to burden a future Board with this dispute.

What are the HOA's options?

Options are:

1) Advise the Contracor that they will be paid the contract balance of $10,000 only after the work specified in the contract is satisfactorily completed. (Assuming you have a well written contract);

2) Contact an attorney and turn the matter over to them; or

3) Pay and learn from this experience. (not recommended)

I'd look closely at the contract. All of ours, for example, say that any "change order" (extra work that wasn't foreseen when the contract was signed) must be approved by the Board or board president before that work commence.

And what does the contract say about liens?

Was the contract properly approved by the board and properly executed?

Does the HOA even own property? Not all HOA's own property so to speak. I am not sure of the power for them to even file a lien against the HOA.

It is time to consult an attorney and take pictures. Review the contract. If it's not been negotiated for adding work or to pay the extra money, he's out of steam. It has to be documented that changes and amounts for those changes were agreed upon by the HOA. The contractor just can't tack on these charges without noting them in the contract.

My ex president/con-man was notorious for doing this. He'd often give a quote and then as he was doing the job always found a way to charge more. He once quoted us at a meeting when the windows were leaking, he'd fix both windows for $50. I came in 2 days later and 1 window was still pouring water. He then told me that he would fix that window for an ADDITIONAL $50! Needless to say the window was fixed and NOT for the extra money...This was how he did business and had to fight it along the way.

So have been there with someone like this. It's best to review your contract and make sure the conditions/agreements. You can not randomly add charges without documentation. Court can only make one whole. They have to prove they would be out 3K in order to get that money. Can't make a wild statement without receipts or proof of working wage is that amount.