What kind of contract is this--fixed or cost plus?

17 years ago

We're in the middle of our build (siding being installed this week) and have been told that we're already over budget due to a couple of items: 1) Building permits were higher than expected-like $3,000 higher and 2) Soil was too soft and required them to dig deeper for the footing.

Here's the verbiage in our contract with regard to purchase price: Full purchase price of the above described contract for sale is $_price listed here_ payable by Owner to Builder in Construction Draws paid to Builder by Owner's Bank, throughout the construction process herein provided, in the form of draws agreed upon by the Owner, Owner's Bank, and Builder, of which the initial construction deposit shall apply as part. The only allowances listed are for things like flooring, cabinets, and plumbing fixtures.

Our contract mentions that the cost of "bringing the footing up to buildable level will be the cost of the Owner," so I'm fine with that (even though we weren't notified ahead of time and given the opportunity to respond in writing). But I don't think I should have to pay for the apparently unexpected cost of permits. Isn't that a basic part of bidding for a job? Nothing about our house plan changed, so isn't it the bulder's problem for not doing his homework before giving us a bid?

What do you think? Thanks, and sorry for the long post!

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Comments (4)

mdev
17 years ago
If in the contract it specifies that the builder is responsible for permits, than they take the hit for the overage, based on the verbiage that you quoted above. Sounds like a fixed price to me.

We're at the same point in the build, roofing/ siding going on this week....Good luck.
muddypond
17 years ago
You have taken a snippet of the contract and asked folks to render an opinion without knowing all the particulars. Any answer you get will inevitably be compromised by this.

What did your lawyer say when you ran the contract by him/her prior to signing it?
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sniffdog
17 years ago
The same thing happened to us. The permits were an allowance item in our contract and we had to pay more than what the builder estimated the permits would be.

I was more ticked off at my county than I was the builder since the fee they charged was far more than the "services" (translation: impediments) they provided during our build. I wrote the check and moved on to the next crisis.
mightyanvil
17 years ago
It appears to be a turn-key (not owned by you until finished) Fixed Price contract with Allowances for some items. Allowances are like small Cost of the Work contracts within a Fixed Price contract. These Allowances should be well defined in the contract.

I've never known anyone to be responsible for permit fees other than the owner of the project but if the builder owns the project until the end I guess the permit fees would be part of the Fixed Price unless specifically excluded or listed as an Allowance.