What does your contract say regarding retainage?

You shouldn't be paying your builder anyway until he has provided you with the lien waivers from the subs for work completed.

Ditto what Dixiedoodle said. Here's the order: Sub does work, submits bill to Builder. Builder pays sub, gets lien waiver. Builder submits lien waiver with draw request, Owner releases draw money.

Stand firm.

Thanks,
We don't have lien waivers....can I get them on my own now or is it too late? How do I go abut it?

Unless you pay the subs directly, it is your builder who gets the lien waivers. Are you working with a bank or an attorney? They generally require lien waivers before allowing draws.

Do you really not have ANY lien waivers from your entire build? Do you have a lien agent on your building permit?

Dixiedoodle...looks like we did this all wrong...We went through a bank for all the payments except the last since we reached our threshold for a jumbo loan. So, we whatever remained we are paying out of our pocket. Our builder said we would be charged for any lien waivers we wanted.

What? He wants you to pay extra for lien waivers? That's absurd.

In lieu of a lien waiver, you could request the sub's invoice/bill and a copy of the cancelled check that paid that invoice/bill. That should satisfy the requirement of proof that the subs have been paid.

I thinkk the real rpoblem is that the builder and us are not on the same page on how much it would cost to finish the items on the punch list. For examplle, there are three days of work left for the painters (interior andd exterior). even if one person comes for three days (more than one person will be needed) at $15 an hour, it will cost more than $300 not including materials. Our builder has allocated $175 for everything. How do I make him see this?
I feel so trapped. He does not want to take the $16,000 we are willing to release...he is SO adamant about getting the amount he wants and assigning his own retainage to us. We want this settled as soon as possible but just need to ensure our safety net too...

It sounds like you are in trouble. Consult an attorney. Find out what your rights and obligations are under your contract and local laws. A one hour consult fee isn't that expensive, in the scheme of things. It may save you many times the fee.

He won't accept half of the remainder? Shoo, I wouldn't have even offered half, and I sure wouldn't give him 3/4! And I have never heard of a charge for a lien waiver... that waiver means that money was paid to someone for something specific and thus the someone cannot charge you again.

Okay, back to the contract. I'm fuzzy on y'all paying cash out for the overage cost. No, actually, I understand that part, but I'm fuzzy on how the overages were computed and who determined the charges and who made the decision of how much to pay and where is it all written down as to how much is owed to whom for what??

I think I would check very closely with the bank regarding all the lien waivers, of which you *should* have been given a copy. IOW, if the bank is holding the waiver on all the exterior painting that means the sub claimed all the exterior painting was done... and you don't pay what has already been paid. And personally, I never pay for unfinished job -- a deposit yes, but paid in complete doesn't occur until work is complete.

Gotta say that when a guy tries to fuzz me about one thing such a unreasonably low charges, then I'm inclined to want to see what/where else he did succeed in fuzzing.

Huh? He's telling you that there will now be a charge for collecting lien waivers!? Run, don't walk to a good construction attorney.

Anyway, I think it is ludicrous to believe that paying this builder ANYTHING right now will result in getting the punch list items wrapped up. After all, you currently have, in your possession, his ENTIRE final payment and he's still not doing any work. This scenario is not going to improve once you release funds to him.

I don't understand his stance of taking no money until it is what he wants. Personally, I'd say "fine then, I won't pay you anything." And then I'd turn around and have the items taken care of myself, subtract their amounts out of the final draw that you owe him, and then wire him the amount left minus those monies. He really can't refuse the wire...if he's stupid he could send it back. But, again, this would depend entirely upon what your individual contract states regarding payments and withholdings.

he has said that if we don't pay the rest of the money, the subs will put a lien on our home and we may have to pay more than we expected (since it is a fixed price contract).

This sounds like he hasn't paid his subs yet so there wouldn't be any lien waivers to collect.

Your builder knows you are holding all the cards ($16,000) and is using scare tactics to get you to hand over as much money as he can get out of you. Keep that $16k until all work is complete and lien waivers are secured. Your instincts are right and you should consult an attorney and draft a letter to your builder stating what your intentions are. Don't let him bully you!

Thank you all...now I don't feel so unreasonable. I emailed him again asking him what guarantee I have that anything will be finished even after the payment is made.

I requested we meet so that we could go over what is owed to which sub-contractor and who can possibly be paid so that at least some work can get started with the $16,000 we are giving. As long as we see some things completed, we would continue to pay him weekly for jobs completed. He replied saying that he did not have the time or resources for another meeting and that until we paid him the amount he wanted, he could go no further. THe guy is not even willing to talk now! I just don't know how he can expect me to say anything good about him to anyone. He obviously had the time before, why not now? He even wants to take pictures of our home for his website!!! DOes he seriously expect me to agree to that?

WOW! He sounds exactly like our builder!
We insisted on retaining money and he finally agreed after we threatened to sue.
When he asked if he could use pics of our house on his website, we said no way!
He did finish some of the items within the year warranty but we had to hire our own people to correct mistakes. We used the retainer money for it.

Don't know how much your fixed price bid was but it sounds to me like you're saying that you still owe the GC about $25,000 total. Given what homes cost to build these days, that is probably less than about 15% of the total bid price and, if so, every penny of it is likely to be "contractor profit." What I mean is, IF your GC paid his subs and materialmen FIRST before paying himself like he is supposed to, then everyone should have been paid and there should be no unpaid subs/materialmen out there to potentially file liens against your property! In that case, your GC's threat is pure bluff although he himself could file a lien against your property IF he isn't paid when your contract calls for him to be.

Read your contract carefully and figure out whether you have the right to retain any money after you move in. (Many contracts require final payment in full upon occupancy - which is totally unfair b/c it doesn't give you any leverage to get punch list items completed. But since builders - or lawyers who represent builders - write most residential construction contracts and trusting owners sign them without fully understanding them, you have to expect that they will be heavily biased in the builder's favor.) On the other hand, it is probable that your contract also says something about the GC being required to provide you with lien waivers to cover each draw he makes. Some state laws actually require that.

The very fact that your GC is threatening you with potential liens and refusing to give you waivers for the people who have been paid is a big red flag to me. I would be worried that maybe he hasn't actually been paying everybody.

Find out what the time limits for filing liens are in your state. Hopefully the time limit is fairly short but I've heard that it can be as long as a year in some states. If the deadline for filing liens is very short in your state, then since you have already been living in the house for 2 months, it is probable that any liens that CAN be filed against your property already have been.

In most states, a person has to give you written notice of their intent to file a lien before they actually file it. But, I think in some states, they don't have to notify you first and that's kind of scary. You can go to your county court house and ask the clerk to show you how to search the records to see if any liens have been filed on your property. If there are no liens and the deadline for anyone filing them has already past, then all you have to worry about is getting the punch list stuff done.

But, if the time limit is long or if you find some liens already filed, then don't give your contractor any more money until you talk to a lawyer in your state who can advise you. I've heard of people having a home built, paying the GC off completely and then, much later, finding out about thousands and thousands of dollars worth of liens filed against their property because the GC never paid a bunch of subs!

Don't count on the bank to have collected lien waivers for you. Remember that the bank usually holds the first lien against your property - which means they get their money first! Thus, they're really not that concerned if subordinate liens get filed. Paying them off will be your worry, not the banks.

If your GC hasn't been paying his subs - and without lien waivers you can't KNOW that he has been paying them - then the punch list items could wind up being a mere nuisance compared to the lien problems.

Here is a link that, if you click on your state, and read the information that is available about each of the documents - you don't have to purchase them to read them - you can figure out a lot about the lien law in your state... or at least figure out if you need to go ahead and get an attorney.

Here is a link that might be useful: US Legal Forms - Lien related documents

mahindroo

If it makes you feel any better, we are facing a very similar situation. For us it's an even smaller amount of money- less than 2 % of our total build. We are a cost plus type of contract so literally all we should be talking about is some of the contractors profit. We have had a great working relationship so far so it's sad to see it "come" to this. Our punch list is similar to yours in length and of course he doesn't want to even start on it until we pay him the final payment. We have a small amount of work left- mostly outside type of things that I would want to supervise to begin with so I am not paying him 10 % to call the excavating company at this point.

He did "threaten" us with a lien, which actually just infuriated me - not the way to my heart for sure. So now no money will change hands whatsoever until I have lien waivers in hand.

Fortunately my family owns a large commercial construction company and are well versed on both sides of these issues. Like you I needed to know if I was being unreasonable.

This small amount of money is all we have for leverage to get a finished job.

Keep us informed.

PD

Hi All,

First, thank you SO much for all your much needed advice and support! I have some good news. After some emails back and forth, our builder has agreed that its a good idea to at least take the $16,000 and pay some subs and get the ball rolling to get some things fixed. I have reassured him that he will receive the rest of the money on a weekly basis as we see work completed. I told him that this was the only way we could retain our confidence level. I sure am relieved and I am definitely going to get the lien waivers...should I get them myself or should I pay him to get them?

He have to give you the lien waivers before you hand him the check. He also have to sign a lien waiver. Do you have the lien waivers form?
We built two houses before and I did not have this kind of problems since we were our own GC. Now we are building again and DH was considering to get a GC until we heard all this horror stories and we feel safer if we manage the money and we make sure that everybody signs the lien waivers and get pay.
To me, it sounds like your GC was blackmailing you. He is pretty good at scare tactics.

good luck

NO, don't pay him to get lien waivers for you. He was supposed to do that for you already. In some states a GC is required by law to get lien waivers. Why should you pay him more money to do what he is already supposed to have done.

I would not even give him the $16K. I would say, you tell me exactly who you owe and how much you owe them and for what and I will contact them and pay them directly out of the $25K still owed on this house. I will take that amount out of the $25K. I would say to him "YOu, Mr. GC, will not touch one more red penny of my money until you see that all the punch list items are completed. period."