Target 8: Deadbeat contractors could make you lose your home

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GRAND RAPIDS, Mich. (WOOD) — The man in charge of a West Michigan home improvement company is facing criminal charges in two counties so far as police across the region investigate customer complaints.

KBC Home Improvement President Stephen Lewis has been charged with felonies in Allegan and South Haven.

In March, the Better Business Bureau kicked the company off its membership list and put out a consumer alert. At least 20 customers complained that they paid KBC for work that was never finished. In at least one case Target 8 investigators looked into, the work never even started.

Steve and Jan Banfill wanted the bathroom of their comfy home near Gun Lake remodeled. They paid Lewis two thirds of the contract amount and got “nothing for it.  Absolutely nothing at all,” Steve Banfill said.

Lewis came to their home to collect the second payment even as his business was falling apart. The BBB issued the warning just two days later after KBC stopped communicating.

The company seems to have disappeared. A KBC van with a smashed rear window and a flat tire was sitting outside the company’s abandoned Kalamazoo office when Target 8 checked it out. When Target 8 investigators went to the Oshtemo Township home of Lewis and his wife Julie, also a KBC executive, a woman who answered the door claimed the couple no longer lived there — that they had moved to Allegan and she didn’t know exactly where.

Target 8 investigators checked a car parked in the driveway an found it is registered to Stephen Lewis.

Just outside Grand Rapids in Plainfield Township, Sheila Bennett admires the new roof on her house:

“Love it,” she said.

KBC finished her job. She paid. Now she may have to pay again.

“The man who actually roofed it came to me and said, ‘I hate to do this to you, but the (KBC) check bounced,'” Bennett said.

She said the roofer, a subcontractor, told her she would “‘have to pay me or I’m going to have to put a lien on the house.'” She refused to give him any money. So far, he has not gotten the lien.

Not so the Illinois company that supplied the shingles. It has put a lien on the Bennett’s home, claiming KBC stiffed it for $3,000.

“These people took our money and never paid anyone,” Bennett said.

Now the lien on her house could force her and her family to pay again for the materials if the supplier takes them to court. They have a lawyer and are fighting it.

Homeowners may not know it, but they have less protection now than they used to against paying double if a contractor takes their money and fails to pay the people who actually do the work and supply the materials.

Michigan residents used to be covered by the Homeowner Construction Lien Recovery Fund. It protected subcontractors and suppliers, too. Funded by part of the contractor’s license fee, it would pay so homeowners wouldn’t have to when contractors left their subs and suppliers in a lurch.

A couple of things happened to kill off the fund: In 2007, the Michigan legislature got rid of a special assessment against contractor licenses that would go into effect to bolster the fund when dropped below a million dollars. Then the recession hit. The number of claims rose. So did the state’s legal costs because the government hired lawyers to chase the deadbeat contractors for payment and a lot of them were uncollectable.

The fund went broke. Instead of trying to fix it, the legislature ditched it in 2010, leaving homeowners on their own.

The sponsor of the kill bill, former Rep. Richard Hammel, was quoted at the time as saying, “The problem with the fund is that it is supported by fees that builders pay, but those fees are at the same level they were 30 years ago.”

The Democrat from Genesee County went on to say that “no one wants the fees raised and if we keep them at the level they are, we can’t possibly pay for the fund with inflation.”

A construction lien is a legal way for subcontractors and suppliers to get paid if they do work on your house and the contractor bounces their checks. They file it and send you a notice. It creates a debt against your property that must be paid before you can sell it. They can also sue you for the money.

But it can get much worse for homeowners.

“They can actually force the sale of your home in order to pay that debt,” Grand Rapids attorney Bruce Courtade explained. He said it’s “nothing to trifle with.”

Courtade is an expert on construction lien law and teaches it to local home builders. He says a forced sale happens more often than you might think, but it usually works as a threat to get reluctant homeowners to pay up.

Courtade said homeowners have to become more involved in projects than they may want to be in order to protect themselves against deadbeat contractors.

When dealing with a contractor, he advised, “demand that they provide you with a sworn statement before you make any payments to them.”

The sworn statement should say who the contractor has paid and how much. Then it is up to the homeowner to contact everyone on the list to check if they actually have been paid.

Courtade says that can catch problems early. If the sworn statement turns out to be bogus and somebody didn’t get paid, that person could still sue the homeowner for the money, but the owner’s effort to verify the payments would likely prevent the sale of their home later on.

He said that if a homeowner finds a problem developing, they can start paying the subcontractors and suppliers directly or issue joint checks. In fact, he said, that may be the best way for homeowners to protect themselves before the work even begins.

“Some contractors will balk at that,” he said, “but you’ll be much safer if you do that from the start. Just say upfront that, ‘I’ll be paying all your subs directly or joint checks.'”

Courtade says most contractors operate ethically, but “one or two bad apples can not only ruin the whole bunch but really ruin somebody’s life.”

“We’re retired,” said Sheila Bennett, the Plainfield Township resident whose fighting a supplier’s lien on her home. “We’re on a fixed income and we’re doing our best. I just can’t see paying again for something we paid a company to provide for us. He just walked away with our money and didn’t pay anyone.”

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