Consider the chronology of events I worked through with one high-powered couple for whom I recently built a luxurious $300 per sq. ft. home. This is a true story; only the names are changed.
Sam made the initial contact with me after driving by a home I was building in his neighborhood. When he first called, he was at best a “B” prospect because he did not own a home site. But he was charming, personable and knowledgeable, having previously been through a custom design/build project. He knew exactly what he wanted in both the home location and architectural style. So, I worked with him without any agreement for more than one year. I assisted with his site-review, due diligence and then introduced him to a local architect.
When the timing was right to enter a construction agreement, Sam told me I had to work with and convince his wife, Suzy, to sign. I presented my contract and she had it reviewed by her team of lawyers. First the freshman lawyer associate and then the senior partner reviewed it. Finally, I did an in-depth, protracted, detailed negotiation on phrases and terms with Suzy, an astute businesswoman.
Fast forward; the contract is signed and funded, plans are completed, construction begins and one year later the home is completed.
Our agreement clearly stated that when the Certificate of Occupancy is issued, the final payment is due without reserve for open punch list. There was no dispute that we were owed $18,700 on the $2 million construction budget. Now here comes a curve ball. Suzy unilaterally decided that she would “… feel more comfortable” holding back the final payment.
“Why,” I asked? She replied, via e-mail, “I am more comfortable holding it until the preclosing walkthrough is complete. Do you want to trust me or deal with my lawyers,” she asked, charmingly. I decided to play along, so I knocked out all the preclosing punch and got $4,000. Then another list was generated. More work and another partial payment ensued. This went on for more than a year until the balance was down to $7,000. I resisted urges to demand my money and fight the unfair treatment. In fact, I maintained somewhat of a sense of humor about it. I believed final payment would come eventually and I did not want to create an adversarial interaction, even though I had every right to do so.
Eighteen months after they moved in, Suzy wrote that she would settle the open amount, but she asked for a discount. “How much,” I replied. “Split it with me and I will mail you a check,” she answered. “Wouldn’t $5,000 be fairer,” I asked. ”Maybe. How about $4,500” was her answer. I said OK and we wrapped it up over lunch. She gave the check to her husband and I had a nice meeting with Sam, who congratulated me on working with Suzy and getting to the finish line without fighting!
One week after the lunch, Sam called. He was at lunch with Max, one of his colleagues. He handed Max the phone. Max asked if I would be interested in helping him bid out the 10,000-sq.-ft. home he had designed to be built on the 75-acre tract he owned. “Can we meet on Saturday morning,” I asked? Max handed the phone back to Sam who said, “Jay, I told Max you are trustworthy, qualified and easy to work with. Good luck,” Sam said. “Max is a good guy, and I think you will enjoy working with him.” At that moment, I felt good that I had demonstrated patience and courtesy, and even flexibility, in modifying the final payment. Although the jury is still out as to whether or not Max will become a client, the fact that Sam referred him to me and I have the opportunity makes me feel vindicated that (sometimes) patience pays better than aggression.