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Started By
Message
Contractor Legal Advice Needed Please
Posted on 6/16/22 at 12:00 pm
Posted on 6/16/22 at 12:00 pm
We just finished building a new house and the final invoice came in nearly 50K over the bid price. We didn't splurge on anything or make any changes that would cause us to go that much over budget during construction. The house is 2,350 sq. ft. and the bid was 370k.
I just got home from meeting with the contractor and informing him that the final invoice brings us to 50k over bid price. I asked him if he could tell me how we were so much over and he was clearly startled and told me that he didn't itemize anything for my house like he usually does. The cost of materials rising was the only thing he could come up with off the top of his head. I told him that I broke everything down and it doesn't add up, so he asked me to email him what I had and he would try to figure it out. Assuming that cost of materials rising during construction is the only explanation, am I responsible for this?
Also, the house took 14 months to build so we had to redo our loan at the 12 month mark which resulted in us missing out on 3.25% interest rate due to breach of contract from our lender, so we got hit with 5% interest rate at closing.
The contractor wrote in the contract the completion date would be October 31st of 2021 and we just closed a couple of weeks ago. Is this not a breach of contract on the contractors part?
A couple other notes:
Our contractor had 11 unfinished homes at one time during the construction of our home. Nobody would show up to work for months at a time. When we would call to find out WTF, he would tell us they were going to be here the following week and yet nobody would show up...
The paint crew for the interior consisted of one (1) lady and it took her over 6 months to finish painting the interior which caused major delays... She would paint once or twice a week if we were lucky.
The extremely long delays were unreasonable IMO because we never had to wait on materials.
Can the contractor be held accountable for anything for breaching the contract by going over his completion date in the contract by nearly 8 months?
Should I pay a lawyer a visit or am I just screwed? Any advice would be greatly appreciated.
I just got home from meeting with the contractor and informing him that the final invoice brings us to 50k over bid price. I asked him if he could tell me how we were so much over and he was clearly startled and told me that he didn't itemize anything for my house like he usually does. The cost of materials rising was the only thing he could come up with off the top of his head. I told him that I broke everything down and it doesn't add up, so he asked me to email him what I had and he would try to figure it out. Assuming that cost of materials rising during construction is the only explanation, am I responsible for this?
Also, the house took 14 months to build so we had to redo our loan at the 12 month mark which resulted in us missing out on 3.25% interest rate due to breach of contract from our lender, so we got hit with 5% interest rate at closing.
The contractor wrote in the contract the completion date would be October 31st of 2021 and we just closed a couple of weeks ago. Is this not a breach of contract on the contractors part?
A couple other notes:
Our contractor had 11 unfinished homes at one time during the construction of our home. Nobody would show up to work for months at a time. When we would call to find out WTF, he would tell us they were going to be here the following week and yet nobody would show up...
The paint crew for the interior consisted of one (1) lady and it took her over 6 months to finish painting the interior which caused major delays... She would paint once or twice a week if we were lucky.
The extremely long delays were unreasonable IMO because we never had to wait on materials.
Can the contractor be held accountable for anything for breaching the contract by going over his completion date in the contract by nearly 8 months?
Should I pay a lawyer a visit or am I just screwed? Any advice would be greatly appreciated.
This post was edited on 6/16/22 at 1:17 pm
13
Posted on 6/16/22 at 12:04 pm to TigerEyes
I would go to a lawyer but it will probably all come down to the fine print in the contract
Posted on 6/16/22 at 12:13 pm to TigerEyes
quote:Yes.
Should I pay a lawyer a visit...?
quote:See above for the only advice you should be getting here.
Any advice would be greatly appreciated.
Posted on 6/16/22 at 12:19 pm to TigerEyes
quote:
Assuming that cost of materials rising during construction is the only explanation, am I responsible for this?
quote:
Can the contractor be held accountable for anything for breaching the contract by going over his completion date in the contract by nearly months?
What does your contract say about these issues? That's where I would start...then I'd contact an attorney.
Posted on 6/16/22 at 12:34 pm to jchamil
It says “Any increase or decrease in the contract price price, change in the work or change in the contract time must be set forth in a change order signed by owner and contractor and approved by the lender.”
And this didn’t happen.
And this didn’t happen.
Posted on 6/16/22 at 12:53 pm to TigerEyes
quote:
he was clearly startled and told me that he didn't itemize anything for my house like he usually does.
My dad was a stoic man who always had a serious look on his face. But the absolute death stare that he would have given this fellow upon hearing that would have made the temperature in the room drop below freezing.
At the very least, you need to have a consultation chat with an attorney and let him look over the contract and this situation.
Posted on 6/16/22 at 1:01 pm to TigerEyes
You need to gather what you have and present it to a lawyer. At the same time I would forward to your contractor that you are doing this to get his initial reaction.
Posted on 6/16/22 at 1:25 pm to TigerEyes
quote:
It says “Any increase or decrease in the contract price price, change in the work or change in the contract time must be set forth in a change order signed by owner and contractor and approved by the lender.”
And this didn’t happen.
This will go a long way toward getting him to the negotiation table.
As others have said, I bet a nice letter on your behalf from a law firm will get him to start talking honestly.
Posted on 6/16/22 at 1:47 pm to notiger1997
Thanks for all the replies guys. I’ve never dealt an attorney and it makes me uneasy to go that route, but I gotta do what I gotta do I guess.
Posted on 6/16/22 at 1:58 pm to TigerEyes
quote:Yes.
Should I pay a lawyer a visit
Posted on 6/16/22 at 2:11 pm to TigerEyes
Get a lawyer without a doubt, your probably not the only customer in the same boat it sounds like. You'll probably at best get out of the 50k change order, anything beyond that will be the straw that breaks the camels back and he just files bankruptcy and starts over again under a different name.
Posted on 6/16/22 at 2:30 pm to TigerEyes
Wow…, hire a professional next time.
Sounds like you closed already? If so, it would seem to me you already agreed to the extension and budget change.
Sounds like you closed already? If so, it would seem to me you already agreed to the extension and budget change.
Posted on 6/16/22 at 2:35 pm to TigerEyes
quote:
Assuming that cost of materials rising during construction is the only explanation, am I responsible for this?
You could be but he should have presented a change order for the increase. You may want to get a supplier lien release from him so they don't come back on you or you may need him to show proof with copies of where he's paid the vendors.
quote:
Also, the house took 14 months to build so we had to redo our loan at the 12 month mark which resulted in us missing out on 3.25% interest rate due to breach of contract from our lender, so we got hit with 5% interest rate at closing.
He needs to be made aware of this and you may need to figure out the real costs to you.
quote:
Our contractor had 11 unfinished homes at one time during the construction of our home. Nobody would show up to work for months at a time. When we would call to find out WTF, he would tell us they were going to be here the following week and yet nobody would show up...
The paint crew for the interior consisted of one (1) lady and it took her over 6 months to finish painting the interior which caused major delays... She would paint once or twice a week if we were lucky.
The extremely long delays were unreasonable IMO because we never had to wait on materials.
Labor is extremely tight right and I've seen this here a good bit. Residential seems it's been 1 week added on top of 4 week schedule.
quote:
Can the contractor be held accountable for anything for breaching the contract by going over his completion date in the contract by nearly 8 months?
Depends on what his contract says. A lot of them have liquidated damages written in if you didn't have any change orders that would have created delays.
quote:
Can the contractor be held accountable for anything for breaching the contract by going over his completion date in the contract by nearly 8 months?
I would spend a little time doing your due diligence showing costs to you and working it out with him before heading to a lawyer, but you do have legit concerns.
He should have been up front and letting you know daily or a least weekly the schedule and goals. He also should have made you aware right at the moment of cost increases and presented this to you. A lot of suppliers are only giving prices locked in for about 48hrs to 7 days and some are even 24hrs. It's just what's going on now. His responsibility should have been making you aware of this.
Posted on 6/16/22 at 2:43 pm to Cdawg
quote:
His responsibility should have been making you aware of this.
Yep.
I have no doubt he had legit cost increases and stuff was happening labor wise that he couldn’t control, but the lack of communication is a big red flag
Posted on 6/16/22 at 2:53 pm to TigerEyes
quote:
and told me that he didn't itemize anything for my house
quote:
the final invoice brings us to 50k
lawyer up.
concede nothing imo.
but lawyering will cost you $$
Posted on 6/16/22 at 4:12 pm to TigerEyes
Did you have a fixed price contract or a cost plus contract? If it was cost plus, the I'm sure the high costs of materials is the reason for the increase. If it was a fixed price contract you didn't authorize $50,000 in change orders, then it sounds like he's trying to screw you by passing along the increase in material costs (which the contractor eats in a fixed price contract) to you.
But there is not enough information in your email to fully answer. And you definitely won't get an accurate or complete answer from anyone with reading your construction contract and having all the facts - that being said to tell you that the advice you get on here will be worth about as much as you paid for it.
But there is not enough information in your email to fully answer. And you definitely won't get an accurate or complete answer from anyone with reading your construction contract and having all the facts - that being said to tell you that the advice you get on here will be worth about as much as you paid for it.
Posted on 6/16/22 at 4:38 pm to jfw3535
Is it considered a change order if he buys everything to spec but they have a higher cost?
Posted on 6/16/22 at 4:58 pm to Drunken Crawfish
Shouldn’t be, but again it all depends on how the contract is worded.
Posted on 6/16/22 at 5:29 pm to Drunken Crawfish
quote:
Is it considered a change order if he buys everything to spec but they have a higher cost?
Typically or ones I deal with, sometimes they have allowances written in saying they will allow $9/sf for flooring. Then depending on final selection, that's where the final price is agreed upon where it's charged or credited.
If something is specified like April of 2021 and it was $7/sf. Contractor should have locked in that order and price with vendor. If not, contractor needs to be explaining openly to the homeowner what occurred with any price hike and presented to them with a change order for any difference. And that's where it sounds like a lot of miscommunication happened.
Posted on 6/16/22 at 5:33 pm to TigerEyes
quote:Ouch. That honestly might be worse than the 50k overpay.
3.25% interest rate due to breach of contract from our lender, so we got hit with 5% interest rate at closing.
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