Hi all

We are looking for some guidance and expert opinion on the design-build company's design responsibility to the owner, in particular, being aware of the building codes (apart from many other issues we're experiencing). We hired a design-build company for a major house remodel that we purchased. The construction loan was based on the appraised value of their design drawings and proposed budget. We signed two contracts with them - first was for the design services and second for the construction. The design phase contract included the provision where we would receive a cost estimation +/- 10% of our budget defined in the contract. The cost that we received for their design that we worked for over 2 months on came up to double the budget (they ran down the cost apparently a week before our scheduled closing). Since they couldn't decrease the square footage, as it was tied to the appraisal that has already been done, they had to scramble a lot of design ideas and finishes we were working on within a matter of days which still brought down the construction cost +25% over the budget and left us with unclear design and selections.

We had to postpone the closing date twice and come up with extra $120K cash in a matter of a week on top of our $200K cash down payment. We tried negotiating the construction contract with them, but they refused to edit it and we had to proceed with the contract since we were out of time at that point, as we were to loose the house (as the seller was going to put it back on the market).

A week after they submitted all the permits and we're already discovering some serious code nonconformity. The first one was the existing load bearing wall that was no longer up to code for our second level story addition. They claimed it to be an unforeseen condition which they will treat as change order at an extra cost to us which they stated in their email they didn't have time to get for us, since they needed to move on with the project. I contacted the county and the last time the load bearing wall code been updated was 3 years ago. It's been almost two weeks and we're still to see the actual change order request with the cost.

The second news was the existing deck that wasn't up to code either (it is build on top of a sun room addition, most likely also not to code as we pointed out to them when we learned the news, which they are still to find out). They proposed us three options over the phone without any cost estimation and forgetting the fact that the deck is on top of that sunroom addition which potentially could also be not up to code. We are still to hear from them about options.

The third one is the kitchenette downstairs that is not also up to code and will require demolition. They indicated that they'll have to remove the hood, but later they said that they scraped the whole kitchenette from the plans they submitted.

We are still to receive any change orders from them with any cost breakdowns and are sitting on the tip of the chair hoping that no more coding issues will come up - this is all before the demolition even began. They are avoiding to respond to our questions as to how these codes weren't considered before and restating the fact that we pretty much pay for all these (not letting us know how much either).

Does this sound like we need to get out of the contract now and that we have a case for terminating this for "cause?" We feel that negligence and misrepresentation was present and they might be in a breach of two contracts: faulty design and cost estimate for the design phase and now claiming "unforeseen conditions" which is clearly defined in the contract as "discovered during the demolition." Having some expert opinion about coding knowledge responsibility of a design-build company would probably make the case. Thank you all for your input!