Was this a bid job? Do you have a contract for a set price?

What does your contract say about bids, prices, quotes, etc?

I'm not sure exactly what you were asking but here's kind of what we had. We got an estimate/contract of what it would cost to build our house, based on the plans. There were itemizations of specific parts of the building (stonework, plumbing, etc.) that were to be done by subcontractors, and the itemization included the amount they had bid for that part of the house - along the lines of an "allowance" I guess. So for the stonework, as an example, the contract listed the amount of the masons' bid to complete that portion of our house. Does that answer your question?

No it does not.

Did you have a contract that says They will provide a house for a set price of $$$$$$$

Are those items fixed or are they allowances? Usually in a fixed price contract the line items aren't even provided because they are irrelevent, only the allowances are detailed. What SPECIFICALLY does the contract say?

The contract does have a price for building the house. It is at the end of a list of things that are described in a column on the left, which includes specifics such as materials to be used (for example the section on framing specifies exterior walls will be framed with 2x6's) and if the item is to be done by a subcontractor, the subcontractor's name is listed along with a description of that portion of the job. Then there is a column on the right with the heading "allowance amount" that includes dollar amounts. Not every item has an amount in this column. Most of the jobs actually performed by the GC have no dollar amount, and the jobs which were bid by a sub have the dollar amount of the bid in this column. Then the things typically thought of as "allowance" items (door hardware, plumbing fixtures, cabinets, etc.) also have dollar amounts in this column.

With regards to bids, price quotes, etc...The closest thing I see is that the contract says there will be change orders signed by both parties for any additions or deductions. There were none of these, it really became a word of mouth kind of thing. There were things that WE added (added to the expense) that we're perfectly willing to take responsibility for and pay. Those things never had change orders, but we're very willing to pay them, because we authorized them. These overages, though came after the work (as originally planned and bid on) was completed. The subs finished, then billed the contractor for more than the originally bid amount once the work was completed. Like I said in the original post, We're by no means looking to stick someone with something we rightfully owe. We're just not sure it's fully our responsibility to pay large percentages over on a job that was bid according to a set of plans, and completed according to the same plan, but then billed WAY over the bid amount?? Just hoping perhaps someone who's been involved in these matters (from either or both sides) could shed some light on how these things are resolved. We don't want it to get nasty, as I'm sure the GC does not either, just find a fair resolution for everyone. I hope I'm explaining this in a way that makes sense.

Sorry this is getting confusing, By the time I've written a response to one post, two others have popped up! Thank you so much for reading, though.

"allowance amount"

Oh boy. I'm assuming you didn't have an attorney look this contract over before you signed it?

Change orders generally are for changes in the scope of work, not for changes in pricing based on allowances. Your state may have a consumer protection law that applies to home construction. Sometimes they say that final prices can't be x% more than a written estimate unless they re-bid it. Based on the amount of money you are likely talking about (I'm assuming it's well into the thousands?) I think you should contact an attorney that is familar with real estate and construction law. State law varies dramatically. It's also possible the "contract" doesn't comply with state law in other ways. I have never seen a contract in my state that actually complies with the law here.

Honestly, you signed a contract you never should have signed.

If you were talking about a small price increase, let's say 10%, I'd say just pay it. But there is no reason for the prices to be that much higher. It just smells wrong.

Here's kind of where we're at with it right now. We've paid up the 'contract' amount for the house (it was divided into payments to be paid at preset times based on the progress of the construction, which was done). We're now settling on the 'extras.' As I've said, there were things we unofficially authorized going over budget on and are fine with paying. However, we feel the disputes like we're talking about really should not concern us. It was an agreement for a job between the GC and the sub, and it's up to them to decide how to resolve the overage amount - either the GC pays and eats it or the sub eats it for not bidding correctly or they split it. If they tell us they'll do exactly x job for y dollars, then do exactly x job, but it takes y+ 50+% dollars, isn't that their poor planning, and not really our responsibility? Are we WAY out of line for seeing it this way and approaching the GC with our feelings? We don't want to get all lawyer-y at this point, and really don't think it will come to that, but don't feel that these overages should really be our responsibility. Anyone have any thoughts/opinions/suggestions?

I don't think you understand what "allowance" means. Allowance means that the amount of money is set aside in the contract price (included in your step payments), but there is no guarantee that is what it will cost. It is a guess-timate. Your situation is complicated by the fact that items were done as allowances that shouldn't be done as allowances. If the price is known it should be fixed. Allowances are usually used when it is next to impossible to estimate the price (site work is a common one, in many areas there is no way of knowing what it will cost until they actually start digging), cabinets are another (because they usually aren't picked out at the point where the contract is signed).

This should concern you because you agreed to a contract where prices weren't fixed. Think of the allowance as an estimated minimum (rarely does something come in under an allowance, but it does happen). If you wanted those items to be fixed price then they should not have been listed as allowances. The builder didn't agree the items would cost $X, he agreed to include that amount in the agreement as an allowance. Were the written estimates, bids and contracts from the subs incorporated into your contract by reference? Are there any other clauses in the agreement that reference prices, estimates, bids, overages, etc.?

If the contract reads as you mentioned and there aren't any other clauses that give you an "out" then you owe the entire amount. UNLESS there is some other state law about estimates, bids, etc., as I mentioned above.

You are right, it should be their responsibility. But that isn't the contract you signed.

It does say in a part of the contract titled "Contactor Aggreement" and under that "Article 3 The Contract Price" -- "The Owner shall pay the Contractor for the material and labor to be performed under the Contract the sum of (total price of house) subject to additions and deductions pursuant to authorized change order" Then further down.. Article 5 General Provisions "Any alterations or deviation from the above specifications, including but not limited to any such alterations of deviation involving additional material and/or labor costs, will be executed only upon written order for same, signed by Owner and Contractor, and if there is any charge for such alteration or deviation, the additional charge will be added to the contract price of this contract."

As I said earlier, there were no change orders signed at any point during the build, so I don't know if this would be an "out?"

What the op describes sounds dreadfully unclear and open-ended with a myriad of conflicting clauses, as noted by sue36 above. It's worth an hour with a lawyer with experience in home building contracts to give you a handle on your legal obligations.

As a small custom builder, I only did fixed-price contracts (with inevitable extras as the process went on and allowances on certain items) and project management contracts. If it's a fixed price, what any material or trade costs me is not the client's business.

I wonder if what you took to be fixed prices by certain trades were really only "estimates" subject to change. (Though I don't know why anyone would agree to such an arrangement, at least in building one house.)

I don't think the siding or natural stone would be in the 'allowances'. They 'subs' can get a very accurate takeoff from the plans. As for the stone...that could change somewhat depending on the slope of the lot. But not much unless you have a very steep lot(high foundation). The siding should be dead on with the original 'quote'. IMO....the GC should pay the diff.

I suspect what happened here is that when OP originally asked for bids, she asked that various item be "broken out" so that she would be able to do an apples-to-apples comparison between bids. Then, when the contract was signed with the selected GC, his bid breakdown amounts for items that SHOULD NEVER have been allowance items were included in the column labeled "allowances"...which he is now treating as having turned every bid breakdown item into an "allowance" item.

Allowances should only apply in situations where the Owner has not yet made specific choices and where the final cost of the item depends heavily on the quality/price of the materials finally chosen by the Owner. That is, in situations where one could install very inexpensive but perfectly usable builder-grade stuff or go over-the-top with high-end selections that cost 4 or 5 times the amount of the builder-grade materials. (eg., carpeting, wood flooring, tile, plumbing fixtures, light fixtures, countertops, appliances.)

Things like siding, framing, and roofing should NEVER be allowance items b/c, for example, once one has specified that a house is to be 2x6 framed with an all brick exterior and 30-year architectural shingles, it should not be necessary to specify the exact manufacturer/supplier of the 2x6s, the exact manufacturer and color of the brick, or the manufacturer and color of the shingles. There just isn't that much difference in cost in the cost of these products.

With true "allowance" items (for example- plumbing fixtures) what SHOULD happen is that, once the build reaches the point where particular allowance selections need to be made, the Owner makes initial selections and then receives a full price break-down for those selections from Builder. This is done BEFORE the allowance items are purchased and installed so Owner can see how much over or under the allowance amount their initial selections will run. The Owner then either gives a final approval of those selections or modifies them in an attempt to come closer to the amount allowed in the contract. NO allowance item is ever purchased or installed in the house until Owner - with full knowledge of what his/her selections are costing - gives a final approval of the selections. Thus, no surprises at the end of the build.

In fact, with our contractor, in every case where our final selections have run over the allowance amount, we have given the GC a check drawn on our personal funds to cover the difference at the time the allowance items were installed. In other words, we are paying for these overages as we go along... which also kind of keeps us from going over-board on them.

It sounds as if, in OP's case, the way the contract was drawn up, everything with a number in the allowance column was treated as an allowance item EXCEPT that owner was never told what amount her "selections" were running - if she ever even made any further choices regarding these items beyond those originally specified in her contract. And now that the items have been installed, her GC and subs are treating "allowance" as meaning, we're allowed to charge her whatever amount we want.

To the extent that type and quality of things like siding, roofing, framing, etc. were specified in reasonable detail in the original contract, and Owner did not upgrade the type/quality of materials used from those originally specified, I think Owner has a strong case that she merely accepted the bid amount GC told her he had received from a sub and therefore has a right to expect that price to be honored.

Even with true allowance items, if I tell my GC I want a particular brand/style/color of faucets and he comes back to me and says, "I got a bid on those faucets and it's going to cost you $6000 for them," he can't come back to me later and present me with a bill for $8000...even if that is what he actually spent. Or, if I say, I want these light fixtures and he says "okay - I can get those for you within the light fixture allowance amount" he can't come back later and say "you owe me more money because the light fixtures ran 40% more than the allowance."

I would recommend that OP see a lawyer ASAP. Her GC strikes me as a snake-in-the-grass type. If he had begun presenting these alleged cost-overruns early on...before purchasing and installing the so-called allowance items, OP could have begun taking steps to control the overall cost. Instead he waited until the end of the build and is now presenting them as "fait accompli" over which nothing can be done except for her to pay the bills. If it had happened on only ONE item, it might be possible that a single subcontractor pulled a fast one on the GC. It would still be his responsibility to either fight the extra cost with the sub or pay the difference out of his pocket but OP might want to help the GC out by splitting the overage amount with him. However, since the same thing appears to be happening with practically every sub, it looks to me like the GC is in the middle of this. He may even have conspired with subs to have them present inflated bills and then give him a kickback on whatever extra amounts they are able to squeeze out of Owner. This would constitute fraud and conspiracy to commit fraud and breach of GC's fiduciary duty towards Owner. And, if GC makes a pattern and practice of presenting homeowners with inflated bills at the end of a build, it is quite possible that he may be liable under the state's Deceptive Trade Practices laws.

How all of this will play out ultimately depends on the law in OP's state, the exact wording of her contract, whether there was ever truly a "meeting of the minds" in forming the contract (which is a prerequisite for a valid contract to be formed) and whether a good lawyer can find evidence of a conspiracy between GC and subs to commit fraud or DTPA violations ...which would require an investigation into the GC's relationships with other customers.

Even without a finding of fraud/DTPA violations, it is quite possible that a court might find that the two sides were understanding the so-called contract in such totally different ways that there was no "meeting of the minds." The contract could be invalidated on this basis and, if it is, the law of equity would take over and OP would be required to pay the GC for the equitable value of the home she received plus an equitable profit to the GC. That could wind up being significantly less than the final bill GC is now presenting her with.

Good luck.