[jacksonpt]

As some of you know, my wife and I are in the process of having a house built. To put it mildly, things have not gone well. We started the process very naive, and have made some mistakes along the way. Now I need some help.

Last fall when all this got started, we signed a contract with our builder. The contract is very generic, but it's all we've got at this point. There's a lot of words in it, but here are what I see as the relative articles:

Article 3. Time of Completion
The work to be performed under this contract shall be commenced on or before NOV. 1 and shall be substantially completed on or before JUNE 1. Time is of the essense. The following constitues substantial completion of work pursuant to this proposal and contract:
<nothing listed>

and

Article 3. The Contract Price
The Ownder shall pay the contractor for the material and labor to be performed under the Contract the sum of $265,000 Dollars, subject to addition and deduction pursuant to authorized change orders.

and

General Provisions
blah blah blah
blah blah blah
All change orders shall be in writing and signed by both the Owner and Contractor, and shall be incorporated, and become part of the contract.
blah blah blah

OK...

Unfortunately, we don't have anything that breaks down what exactly is included in the contract (i.e. what constitutes a "finished" house). We have a verbal agreement that it includes things like a driveway, grass, appliances, etc, but nothing in writing. There have also been a few changes to the house thoughout the process (we made a couple of rooms bigger), but they also were never put in writing.

So now for the ugly part. It's Nov (approx 4 months past the "due date" for our house) and it's still not done. We have no driveway, no yard, and a fair amount of brickwork still to be done (some on the front of the house, a chimney, and a fireplace). We have paid the contract price $265,000 already, plus an additional $35,000 for vairous overages. Work has all but stopped on our house. We are doing all the legwork when it comes to finding a mason and finding someone to do our driveway. Our builder is not so subtly saying we need to pay for the driveway because we still owe him money for additional overages.

So... how do I handle this? I'm about 2 steps away from either suing our builder or killing him (not sure which would be better at this point). But because of how vague our contract is, I'm not sure if we have enough to support legal action.

Any suggestions?

 

[JRB]

Contractor type people are usually pretty humbled by a good ass whoopin if you can deal one out. I hate crooks, and it looks like you found one, or several. Bummer dude.

Is there a homebuilders association. They could help here in Temple. Don't know about up there.

 

[binary visions]

Get a lawyer. A lawyer will be able to tell you whether or not you have a case, and it will be worth the fee to consult him either way. Either you find out that you DO have a case, great, sue his pants off. Or, you find out you don't have a case, in which case I'd tell the builder to fvck himself, eat your overages at this point, and find a new guy - if the builder is going to insist on more money for the driveway and such, you're not benefiting by hanging onto this guy...

 

[Gfreak]

In the state of Washington and I would assume this applies everywhere else in the U.S., substantial completion would mean that the inspector has signed the "Certificate of Occupancy" CO for short. When the CO gets signed that means that the house can be occupied and lived in even though there might be some minor work that still needs to be completed. What I mean by minor work is maybee some touch up paint, a little bit of tile work left undone, etc.

The most important thing to remember is that you are in charge of the money. So if you don't think that the contractor has completed his milestone don't pay him until he does. He'll probably give you his hard luck story or start yelling, don't give in. Just hold the check in front of his face and tell him he better get to work if he wants his money. Live by A$$, Cash or Grass, nobody rides for free!

As for the change orders, I would flip it and would say this to the contractor. Since nothing was in writing, it was not authorized by myself. As such the amount of money you are asking for the extras is $0.

Good Luck on your house, I've felt your pain before.

 

[llkoolkeg]

Not particularly helpful advice at this point, but NEVER 100% prepay a contractor for work. I have never prepaid any more than 25%, and that isolated incident was only because it was a local guy recommended by our church who had to buy a lot of special materials that I knew he wouldn't be able to front. Paying a contractor for all of a job he has not completed invites overruns both in terms of time and cost because he has no more financial incentive to bust his ass on your job. The money's in the bank. He's already enjoyed the party and now all that's left is the nasty clean-up.

 

[jacksonpt]

Not particularly helpful advice at this point, but NEVER 100% prepay a contractor for work. I have never prepaid any more than 25%, and that isolated incident was only because it was a local guy recommended by our church who had to buy a lot of special materials that I knew he wouldn't be able to front. Paying a contractor for all of a job he has not completed invites overruns both in terms of time and cost because he has no more financial incentive to bust his ass on your job. The money's in the bank. He's already enjoyed the party and now all that's left is the nasty clean-up.

Yea, I know - that's one of the naive mistakes we made.

 

[N8 v2.0]

I cringe every time I hear a story like this!

I am a home building contractor and I can tell you without a doubt, nothing gets a builder's attention like a certified letter from a client/clients lawyer.

You need to check your contract and find out if you have to go to arbitration. If you do then suing is probably not an option (your lawyer can help you with this). Make sure you document everything. Make sure you follow the letter of the contract on how to notify your builder of discrepancies. Make sure you do this within the time allowed and in the manner described in the contract.

In the state of Louisiana, we operate under the New Home Warranty Act. I don't know if New York has such a law though.

The biggest issue that I can see is that you paid all the money to your builder. This is not a good situation because you may have implied 'acceptance' by doing so. However, I am sure your state has consumer laws which are designed to protect you. If your builder is a member of the Better Business Bureau then he has to respond to any letter from the BBB and go to arbitration.

 

[N8 v2.0]

Not particularly helpful advice at this point, but NEVER 100% prepay a contractor for work. I have never prepaid any more than 25%, and that isolated incident was only because it was a local guy recommended by our church who had to buy a lot of special materials that I knew he wouldn't be able to front. Paying a contractor for all of a job he has not completed invites overruns both in terms of time and cost because he has no more financial incentive to bust his ass on your job. The money's in the bank. He's already enjoyed the party and now all that's left is the nasty clean-up.

I always operate under a 6 draw payment schedule with the final draw at the conclusion of the contract. All of my change orders are in writting and must be paid for up-front. This protects me and the client later on if some questions come up.

 

[pixelninja]

You need to check your contract and find out if you have to go to arbitration. If you do then suing is probably not an option (your lawyer can help you with this).

This is what has scared me away from building a new home. Binding arbitration is a homebuilder scam to take away your right to sue.

Go talk to a lawyer now.

Check out the site Homeowners for Better Buidling http://www.hobb.org. Don't know if any of this will help you now, but it might.

 

[N8 v2.0]

This is what has scared me away from building a new home. Binding arbitration is a homebuilder scam to take away your right to sue.

Go talk to a lawyer now.

Check out the site Homeowners for Better Buidling http://www.hobb.org. Don't know if any of this will help you now, but it might.

Actually sueing doesn't result in much. You have a far better chance of getting your issues addressed at binding arbitration and the problems fixed.

 

[jacksonpt]

There is this line under article 5, General Provisions:

All disputes hereunder shall be resolved by binding arbitration in acccordance with rules of the American Arbitration Association.

So...

 

[N8 v2.0]

There is this line under article 5, General Provisions:


So...

Contact a good lawyer who deals with construction law.

 

[Hawkeye]

I just built a home with a "small time" builder. Besides being late on the final date by 3 months everything was good.

One thing he was really concerned about was that the lot had to pass final grade and the driveway too. The city held some sort of deposit around $10,000 until that was done. Which was 2 weeks after we closed.

It seems as though this is not the case in your town. He must have all money due him to take off like this.

Contact a lawyer and go to arbitration. You should not have closed on the home until you have time frames for these things to be done FYI

 

[pixelninja]

Actually sueing doesn't result in much. You have a far better chance of getting your issues addressed at binding arbitration and the problems fixed.

I'm sure you know more about building contracts than I, but I don't buy that. First, if binding arbitration were to work in the homeowners advantage, I really doubt that builders would put it in their contract. Second, if I were building a house and there were issues the builder refused to acknowledge, I would want to have any and all legal recourse at my disposal. How would it help me to only have one recourse? The right to a trial is in the Constitution. How could anyone think its a good thing to waive that right?

If I'm wrong, let me know. Am I missing something here?

 

[quadricolour]

I'm sure you know more about building contracts than I, but I don't buy that. First, if binding arbitration were to work in the homeowners advantage, I really doubt that builders would put it in their contract. Second, if I were building a house and there were issues the builder refused to acknowledge, I would want to have any and all legal recourse at my disposal. How would it help me to only have one recourse? The right to a trial is in the Constitution. How could anyone think its a good thing to waive that right?

If I'm wrong, let me know. Am I missing something here?

I can't speak specifically to building contracts, but binding arbitration almost always favors the party with more resources. That's why they put it in the contract! Waiving your 7th amendment right to sue is a bad thing!

 

[N8 v2.0]

I'm sure you know more about building contracts than I, but I don't buy that. First, if binding arbitration were to work in the homeowners advantage, I really doubt that builders would put it in their contract. Second, if I were building a house and there were issues the builder refused to acknowledge, I would want to have any and all legal recourse at my disposal. How would it help me to only have one recourse? The right to a trial is in the Constitution. How could anyone think its a good thing to waive that right?

If I'm wrong, let me know. Am I missing something here?

Well, basically law suits are quite expensive even if you are the winner. Yes, there are cases that need to be sorted out in court but a lot of the time a law suit setlement is basically what you would have gotten if you'd gone to arbitration first.

I believe you still can sue if your contrator fails to respond to the arbitration setlement.

But, I've never had any issues that I wasn't willing to resolve with my clients. Sometimes in their favor and sometimes not, depending on what it is. The Louisiana New Home Act is a state law which pretty much spells out what is and what is not the builder's responsibility.

Although not spelled out in my construction contract, nor any other builders that I know, a drive way is something that is included. However, if a client wanted an extra wide drive way then that would require a change order and must be paid for up-front before the work is done.

Usually there are two sides to these disputes, but I can sadly say that there are some real sleezy contractors in the business...

 

[jacksonpt]

Another question for you folks... Should I be responsible for escalating costs of materials? Since the house was started (and the contract was signed), the price of lumber has about trippled. Should that increase be trickled down to us or is the builder responsible for it? To this point, most of the money we have paid beyond the initial $265k was for the higher costs of materials.

 

[Brian HCM#1]

You paid your builder as stated per the contract, he took too long and prices raised, it's your contrators loss not yours. Thats why they give you a bid to do the project, you agreed to his amount, and that is it, baring any huge changes.

 

[N8 v2.0]

Another question for you folks... Should I be responsible for escalating costs of materials? Since the house was started (and the contract was signed), the price of lumber has about trippled. Should that increase be trickled down to us or is the builder responsible for it? To this point, most of the money we have paid beyond the initial $265k was for the higher costs of materials.

Sounds like you have a 'fixed price' contract and not a "cost plus."

Your builder should be responsible for knowing what the heck he is doing and should have taken into consideration the rising costs of materials into the contract price you both agreed to. Increasing costs have been no secret and your contracter is screwing you over if he is making you pay for them.

If you had a 'cost plus' contract then you would be responsible for the costs.

*edit: FYI... lumber has gone up 15%-20% or so... but NOT tripled....

 

[ioscope]

Finish building it. Don't sue them though. Suing people should be in only extreme cases. Just give him bad reveiws at better business bureau, homebuilders assoc. etc. and unrecommend him to his prospective clients.

 

[Lexx D]

Finish building it. Don't sue them though. Suing people should be in only extreme cases. Just give him bad reveiws at better business bureau, homebuilders assoc. etc. and unrecommend him to his prospective clients.

Sounds nice but that doesn't help him from being screwed over.

 

[pixelninja]

Finish building it. Don't sue them though. Suing people should be in only extreme cases. Just give him bad reveiws at better business bureau, homebuilders assoc. etc. and unrecommend him to his prospective clients.

And how do you propose he finish building? He's already paid $35K more than the original contract price. How much more would it take for you to consider this an extreme case?

I agree with anyone that says there are too many frivolous lawsuits being filed, but in my opinion, this wouldn't be one of them.

 

[N8 v2.0]

I thought jacksonpt was living in the house...?

 

[Brian HCM#1]

I thought jacksonpt was living in the house...?

me too

 

[N8 v2.0]

Jacksonpt,

I was in my real estate att'y's office yesterday reviewing a contract he was drafting for me and I asked him some general questions about your situation.

He said the best thing to do is to write everything down and retain legal help. Consumers have a good track record of prevailing in situations such as yours.


-Nate

 

[Skookum]

I am a home building contractor and I can tell you without a doubt, nothing gets a builder's attention like a certified letter from a client/clients lawyer.

aha! now i know your deal..... neaky:

 

[Austin Bike]

We had an issue like this. Builder ripped up driveway and wouldn't finish the job. He had his sign up in front of the house that said "XYZ construction".

After he failed to return calls for two weeks I appended "won't finish this job" under the company name on the sign.

Magically I got a call about an hour later threatening to sue me for slander. I pointed out 2 things to him:

1. It's only slander if it's not true. He could only sue me if he finished the job.
2. It's pretty likely that if it did actually go to trial, that out fo the judge and the 12 jurors there was a high likelihood that some of them had problems with contractors starting the job and not finishing. They would see this as their own personal crusade to right the wrongs of the past and he'd get screwed in the process.

Job was completed in less than a week.

I recommend getting a lawyer involved. An oral contract is as valid as a written contract, it's just harder to enforce because you have less proof. Of course your lawyer can point out that the contractor will be less believable than the poor homeowner in court and that you will also be more likeable. The last thing a contractor wants to do is try to explain themselves to a hostile jury.

That is assuming that they show up to court

 

[N8 v2.0]

Jacksonpt...

How is this thing going?

-N8