Bankrupt builder?

19 years ago

Don't want to get too deep into details, as this is all still in the rumor phase, but the rumors seem pretty convincing...

My house is about 80% done, and my GC is said to be filing bankruptcy. I've received no official notice, nothing has been in the paper yet, and the builder hasn't said anything. [But the lumber supplier and some others have.]

I'd say I'm about even on what I've paid him/what he's done. We are way behind schedule [starting month 13 of a projected 7 month build], and it's certainly possible that there's a giant, scary bill waiting for me down the road, but so far, so good.

So where do I go from here? How do I protect myself? He's supposed to be getting me some lein releases from the subs for my bank, but it's taking forever-- wonder if that's related. I'm paying most of the subs directly, probably a good thing.

He hasn't abandoned the project, though he isn't putting much into it, either. I'm concerned that he won't be able to get supplies to keep going. My priority would be to get this house done as soon as possible, as close to budget as possible, with as little hassle as possible.

Help!

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Comments (4)

kats
19 years ago
Oruboris,
I don't know if I can help you or not but I sure can sympathize. Why some builds go smoothly and others are so far out of the realm is unbelievable. I know there are others on this forum who are better with the law than I am.
You might want to discuss your concerns with your lender up front. They might have some ideas for you. I think I'd contact the subs yourself for the lien releases since you said you paid most of them anyway. Do it before he files. Another thing that might work is pay the suppliers directly yourself if they're balking at your GC's credit line.
I hate to say this but our GC was in the same boat as yours. He was building 2 homes at once and robbed Peter to pay Paul so to speak. We got hit twice with giant scary bills towards the end of our build. He's now moved to Texas (though we're not finished with our punch) and I hear he has changed professions. Smart move on his part. He was a good builder but a lousy businessman.....

Good luck!
bonelady
19 years ago
A major builder in the Chicago area has declared bankruptcy and a lot of customers are worried

Here is a link that might be useful: Neumann Homes
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labradoodlelady
19 years ago
Oh, oruboris, I don't really have any decent advice, but just want to say that I am so very sorry this is happening to you. Out here in Hawaii, we have a weird custom of "bonding" construction jobs --it costs 2% of the construction amount, but basically the bonding company is promising that if anything happens to the builder, they will complete the job in the time frame and cost of the contract.

I hope it all works out! I agree with the earlier poster who mentioned getting lien releases from all the subs you're paying now, rather than waiting for the GC to get them. He might not be able to if he owes them money, but when you're paying folks direct, they should have no problem giving you the releases.

Good luck!
Kimberlyinva
19 years ago
My very first build the builder went bk. The plumber relayed it when he called me *to see something* then refused to leave until I gave him a check...sure I could have left him out there to sit all night *LOL* but I knew it would have been just one more big bill to pay at the end. Plus he really scared me! So that build tanked at rough in, we had to pay to finish the rest. Thankfully it was a cape so we were able to afford to finish the downstairs to close then refi to pay for the rest later. The neighbor had sued the builder & won (pre BK) for road clearing & gravel. The builder then sued me for the road (5k) but lost (after his BK!!!! After he screwed me!!), DAH because right there in the contract it states the I would not hold HIM liable for the road, not the other way around. The judge was furious for that wasted time. Oh, the day that he lost he called the permit office to rat on us for finishing the second floor without permits...or, so he thought. HA!

Labradoodlelady, I think that bonding of construction jobs just might just be a good idea....expensive though.

Good Luck. My thoughts are with you on this!!!!

KAT