If you want to supply subs, then YOU are the GC. That is an extremely risky proposition to you. Some banks wouldn't even allow that to happen. They want the assurance of an experienced contractor at the helm. If this is a cash build, you can certainly do what you want, but you'd be treating your GC like the site supervisor instead of the GC, and thus assuming overall responsibility for the build. Part of the reason you hire a GC is for his connections with subs, and his supervision of the subs. You would be removing both of those things from his control and assuming responsibility for them.

Yes, in a cost plus, the owner always assumes the risk of the cost of the materials or labor increasing or decreasing. If you can't afford to take that risk, perhaps a fixed cost contract with all of your specs spelled out would be more to your liking. Then the builder would assume the risk for the material increases. However, that doesn't come without a higher up front cost. The builds may end up being the same cost in the end, but the fixed cost has more of a known price up front if it's well spec'd.

Live-wire-oak,

I just like to have my own tile installer, hardwood installer, and electrician. All those three subs from GC are dishonest. That was the reason I want to use mine.

If you are considering a general contractor who you believe used dishonest subcontractors, it may be a good idea to find another general contractor.

If dishonesty is really involved, no amount of words on a piece of paper will correct matters.

Just an opinion. Good luck with your project!

You don't marry someone who cheats on you at the engagement party. If you think the GC uses dishonest people, that says a lot about this not being the right person for you. Probably says a lot to the GC as well, so why he's also willing to enter into a contract with you is also questionable. This is one of those disaster stories waiting to happen, and no one has even broken any ground yet.

We had a Cost Plus contract with no fixed fee. Our contract was very simple, but our attorney modified it to include a few clauses to protect us.

For clause #1, that would make my bank nervous, so if you are going through a bank, you may want to pass that phrase by them. In our case, the GC had no such clause.

For clause #2, I believe that refers to a final affadavit by him, stating all work is complete and he has been paid and no liens have been filed. Again, pass this by your lending institution, but this is a red flag to me. Our GC had to file a final lien waiver.

For clause #3: Basically, you need to work out ahead of time, with the GC, what you will do and what he will do and have it as an attachment to the contract. He gets a commission though, so he may want to hire the subs to get the fee, but with that fee, he becomes responsible for the outcome, the schedule and any warranties. You can ask him to hire your subs, but if he hasn't worked with them before, he may not want to. In my case, we had a few subs we really wanted and our GC agreed to let us hire them, but he would not warranty the work, supervise or have anything to do with them. So you will need to weigh which is most important to you.

As far as material costs, to keep our GC from just buying anything and saying the prices changed, we had the following clause:

Material prices and estimates will be given and discussed with HOMEOWNER to obtain HOMEOWNER approval prior to any phase of construction beginning. HOMEOWNERS will have the right to terminate this contract if costs (including contracting fees) exceed approximations on the attached budget estimate by 10% (for example, due to extreme inflation).

Because we wanted some of our own subs and to provide some of our material, we had the following clause:

Items provided by HOMEOWNER will be excluded from the xx% CONTRACTOR fee (see attached for HOMEOWNER-provided items).

I would HIGHLY recommend having your lending institution or an attorney review the contract before you sign. It cost us one hour ($150) to have ours reviewed and it saved us in the end.

As additional help, here are a few other excerpts from our contract:

CONTRACTOR and sub-contractors shall be licensed and have insurance for their profession.

CONTRACTOR will not use any subcontractor that does not carry Workers Comp insurance without HOMEOWNERS' written permission.

Construction will be completed within 12 months, start to finish, excluding extreme unseasonable weather.

I agree with Live wire oak in that banks will usually only allow licensed Class A contractors. If you are doing a cash build, I would be very careful to thoroughly check out this GC and hire an attorney to review/modify the contract. If you know a lot about building, know people that do a good job and are doing a cash build, you could be your own GC and hire this guy as a sub to take care of foundation, framing, etc. Some lenders (Farm Credit) will allow you to be your own GC, but they have certain rules.

Good luck! Building is like the movie/book Jumanji - once you start, you must finish, so make sure you have all your ducks in a row first. Even with being ready though, you will have surprises and modifications, but they shouldn't be catastrophic.

I just saw the recent posts and completely agree with the other responses. If the GC hires dishonest subs, why hire him as your GC? If he has given you the lowest estimate, I wouldn't hire him. The lowest estimate means nothing if they are possibly dishonest.

That is one thing our attorney said when reviewing the contract, no matter how good the contract, if you can't trust your GC, the contract is worthless. I think you should consider someone else. You have mentioned too many questionable things that can become disastrous.

Live-wire-oak,

His Tile lady does not have what I want and she just quoted a number without materials (her price is lower than what she has, which means I have to pay more for "upgrade").

His hardwood floor guy forces me to use his wood in stock only.

His electrician quote me electric cook top, electric tankless heater, electric heat pump.
None of those is on my list. I informed builder. He talked to his guy and came back saying that $300 take off from which said quote. Hmmmm…..2 of 200AMP Services, 2 sub panels, with 220volt, are only cost $300 ???? I do not think so !

Much appreciate for all insight!

RQHOME,

Your posts are informative and helpful !

I will certainly attach your clauses to mine !!!

You wanna micromanage the build then YOU GC the build. A contractor would have to be desperate to enter any contract where there was so much suspicion and distrust on the other side of the contract. And you'd be foolish to enter into this contract as we'll. find someone else to build your home.

Is the GC's name is Terry the one I recommended awhile back? Even if it's not, there seems to be a ALLOT of miscommunication. There is no reason why you can't supply the tile and his sub can install. The wood guy is only trying to sell his inventory(everybody will try to push what they have in inventory first) but you can still get whatever kind of wood you want from them.

Also, since English is your second language, perhaps it would do everyone good to have a fluent interpreter to sit in on a meeting between you and the contractor. I don't think you've really had a good meeting of the minds yet, with the contractor understanding the importance of your product seections to you, and you not understanding that just because someone else can get product and labor cheaper does NOT me that they are a better choice on a build. (The cheap choice is the suspect choice, usually.) You still seem to have some issues with standard building practices and trust. It pays to err on the side of caution when it comes to communication. If you can't come to a meeting of the minds, then by all means move on to someone else.

Robin0919,

It was not Terry.

Yes, that lady tile says I could "show" her where the tile locates, and she will be the one to get them :-)

HollySpring, I have a quote in my hand here from an electrician is working on a new custom home built across from my lot. I like this one better because He is very cleared on his quote what I want !!!

Both of the quotes only $2000 different, which is no big deal. The issue was GC's guy is too general on his quote, and everything will be "extra" !!!

RQHOME,

While having your own subs or material/labor, was your GC stated you must pay him and to his subs materials/labor for delays if occur as mine ?

Thank you.

First of all, I don't necessarily understand you having to pay his subs for materials if you are providing the materials thru your subs. I do understand having to pay him labor if there are delays - mainly because if he has employees, he has to keep them busy to keep them working for him. If he has subs on standby for a certain time, he doesn't want them taking another job.

No, I did not have to pay my GC materials & labor for delays, but I had the guys lined up way ahead of time and put in a schedule according to the GC's schedule. For example, I signed contracts with the subs that they would come out on a weeks notice in say July or whatever month the GC told me he would be ready. I would communicate with the GC daily to go over purchases of materials and to see what was going on, so any weather delays or other delays could be communicated to the subs I had on standby.

You could put something in the contract stating that the GC will notify you one month in advance of needing a sub, or whatever lead time is necessary.

However, you need to be aware that having your own sub can be problematic in that most subs will schedule with GCs they work with often and you will NOT be the priority because the subs "bread and butter" is working for many GCs - sometimes just 2 or 3 or depending on the GCs reputation, just one. They will take side jobs, but only if they can work it in. You will be considered a side job. I did have a sub that didn't come out when I needed. My GC was good about it and did another job while waiting, but if it happened more than once, he would not have been happy.

In fairness to the GC, he doesn't want to be slowed down. He makes the most money by building houses quickly and moving on to the next. If he has employees vs subs, he will have to pay them to keep busy, so he won't want to be waiting around. If he has subs, he won't want them taking another job.

I'm not sure what to tell you about whether to continue with this GC. My gut reaction, based on your questions and the clauses in the contract is to find a different GC - one that you trust, feel that you can communicate with well, is fair and has a good reputation.

I am in a small, rural area in Virginia, so my choices of GCs were limited, but I chose one of the 3 with the best reputation. He was known for being the most honest of the 3, but he was not the cheapest. I went with him after looking at other houses he built and talking to prior owners. I also asked around A LOT - the local building center, small cabinet and tile shops, the local Farm Credit office, etc. I went with him because I could talk to him and trusted him.

If you are having doubts now and don't feel comfortable, then I wouldn't continue. Starting off distrusting and not happy is a recipe for disaster. Once the ground breaking starts and things are moving, you will have less say in what happens. That is why you hire a GC - to build your dream home with everything agreed on ahead of time and complete understanding. Without that you are headed for trouble.

Did you get estimates from more than one GC? Did you look at prior houses built by them (drive-by)? Did this current GC willingly give you references?

If you decide to find someone else, small towns are good for finding out about people, but large cities can be more difficult. However, there is more competition in a big city, which is good - not so in a small town at a times, a definite draw back. I would check out Angie's List, check on GW for people in your area (sounds like Robin0919 gave you a reference) and I would go to places that have something to do with building. For instance, I found out about other GC's and good subs that I hadn't heard of before by talking to people in my cabinet shop, my granite fabrication shop, my tile shop and my paint store. I did not go to Lowe's or Home Depot - I'm talking about smaller, privately owned shops that have been in business for a while. People in the building trade, Know other people.

Best wishes! Building can be fun, but it is stressful, so don't add to the stress by having someone you can't trust.

BTW, it is better to have a quote that is very specific and not too general. I've gotten bitten by too general.

This post was edited by RQHome on Fri, May 23, 14 at 16:39

RQHOME,

Contractor also state in construction agreement that I have to pay if he leaves, or I terminate him I pay him as well.
So, either way he wants me to pay. He can terminate contract any time for any reason and I have to pay. Wow, who will sign this kind of contract?

I emailed him that if this clause not remove, we could stop here.
I also emailed and asked him if you are thinking of leaving before the job completed, why would you want to build my home? And how come I hire you to build my home unfinished?

If that is in your mind, we could stop now ! I said.
And If you leave you do not get paid!

And waiting for his response

Has your attorney looked at this contract? What does he say about it?

I hired my own sub 10 years ago to do my master bathroom in this build because it was a special rectified porcelain tile that I foolishly thought I needed a "special" tile guy for. The guy came from out of town with a couple of good references.

He built me a leaky shower (twice). Half the floor tile started moving. We couldn't use the shower for 2 yrs after moving in.

I finally gave up on the guy (Anthony from Bloomington, Illinois if anyone is interested). Hired a local guy to take everything out of the bathroom (vanities, toilet, etc,...gut the shower) and redo bathroom.

So, I paid for my bathroom twice.

The moral of the story is....don't hire your own subcontractor.

Don't even think of using this GC with that kind of wording in the contract.
If you haven't yet, call Terry. He is an excellent GC and won't give you this kind of BS. I have NO ties with him.

Robin0919,

Could you please give me his phone number again?

Thank you!

I believe his number is 704.913.7253

Robin0919,

I can not find his website. Does he have one?

What price ranges he was building?

Thank you!

I don't think he has a web site. He builds houses ranging from 150k - to over a million. Most are in the 300-500k. He has an unlimited lic.

Find a new GC. I don't like the wording of the contract. Whoever you do go with, spend the $200-$300 to have an attorney look at it before you sign.

Thank so much every one.

RQHome,

I meet the contractor, he says will remove that clause. I told him re-write the agreement to fairness to both sides.

Let's see how is he come up with.

All construction contracts must have a termination clause otherwise when one party whats to terminate the contract (and it might be you) no one will know how to resolve the outstanding issues without going to court which will benefit no one.

Don't let the contractor make up a one sided contract; get a professionally prepared contract and use it or copy the relevant portions of it.

Here is the termination section of an AIA 107 Cost of the Work contract:

"ARTICLE 19 TERMINATION OF THE CONTRACT

19.1 TERMINATION BY THE CONTRACTOR
If the Owner fails to make payment to the Contractor for a period of 30 days, the Contractor may, upon seven additional days' written notice to the Owner, terminate the Contract and recover from the Owner payment for Work executed and for proven loss with respect to materials, equipment, tools, and construction equipment and machinery, including reasonable overhead, profit and damages applicable to the Project.

19.2 TERMINATION BY THE OWNER
19.2.1 The Owner may terminate the Contract if the Contractor:
.1 persistently or repeatedly refuses or fails to supply enough properly skilled workers or proper materials;
.2 fails to make payment to Subcontractors for materials or labor in accordance with the respective agreements between the Contractor and the Subcontractors;
.3 persistently disregards laws, ordinances, or rules, regulations or orders of a public authority having jurisdiction; or
.4 otherwise is guilty of substantial breach of a provision of the Contract Documents.
19.2.2 When any of the above reasons exists, the Owner may, without prejudice to any other remedy the Owner may have and after giving the Contractor seven days’ written notice, terminate the Contract and take possession of the site and of all materials, equipment, tools, and construction equipment and machinery thereon owned by the Contractor and may finish the Work by whatever reasonable method the Owner may deem expedient. Upon request of the Contractor, the Owner shall furnish to the Contractor a detailed accounting of the costs incurred by the Owner in finishing the Work.
19.2.3 When the Owner terminates the Contract for one of the reasons stated in Subparagraph 19.2.1, the Contractor shall not be entitled to receive further payment until the Work is finished.
19.2.4 If the unpaid balance of the Contract Sum exceeds costs of finishing the Work, including compensation for the Architect's services and expenses made necessary thereby, and other damages incurred by the Owner and not expressly waived, such excess shall be paid to the Contractor. If such costs and damages exceed the unpaid balance, the Contractor shall pay the difference to the Owner. The amount to be paid to the Contractor or Owner, as the case may be, shall survive termination of the Contract."
---------

In a Cost of the Work contract, the contractor's proposed cause about cost increases makes no sense and makes me wonder if the contractor understands how a Cost of the Work contract works. Perhaps the contractor means that when costs are greater than the "Budget Estimate" the owner pays the up charge but that is the definition of a cost of the Work contract. Or there might be a Guaranteed Maximum Price that he hasn't told us about.

If both parties do not know how to structure a contract (and this appears to be the case) I suggest hiring a design professional or lawyer to advise you in order to avoid unnecessary costly disputes later.

This post was edited by Renovator8 on Wed, May 28, 14 at 9:18