Sounds like the contractor is using the unpaid permit fees as an excuse to get out of his obligations under the contract with you, which, I suspect, would translate into much more than the $500 he claims you owe him. While you cannot "make him" come to the house, you can: (1) have an attorney write him a "nastygram" and demand that he honor his obligations; (2) sue him, possibly, under the Unfair Trade Practices and Consumer Protection Law for treble damages (3X what it would cost to fix your...
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You should examine the lease to see whether it's assignable and if so, on what conditions. Generally, commercial leases are assignable, but often "with landlord's consent, which consent shall not be unreasonably withheld". Often though, an assignment may be one "with recourse", which means that even though someone else is occupying the premises, you are still "on the hook" for rent if the new tenant doesn't pay, so such an arrangement may be risky unless you are comfortable with the tenant's...