Hes not taking responsibility for much. Is this just the beginning???

Did you have a real estate or construction lawyer look over this contract before signing it?

cpartist

no

jn3344
yes, we've only gotten as far as partially finishing the crawl space. We're currently at a standstill as I let them know that I'm unwilling to pay what they're asking.

Sophie Wheeler

the contact is referring to an allowance sheet that we have with expected items not included with the basic house. Brick is not on that list, nor does it state that we'll pay any amount they decide to charge.

Amy at this point, I would find a construction lawyer to look over your contract and see if there's anything you can do. I read it the same way as Sophie is reading it, but then again, I'm not a lawyer.

My contract specified foundation and dirt work were largely unknowable and stipulated cost plus. Invoice from the sub plus builder mark up. There was an estimate based on the architects plans and the topographical survey of the lot.

The survey was off by over a foot on the slope. It happens. Foundation and fill was $8,000 extra.

When all was said and done the build came in about 2-3% over. The 8k wasn't that significant. Not bad for a true custom.

But your contract doesnt have many protections for you, and this process is just getting started.

Good luck to you.

None of us can give you the advice you need. We have a section of your contract but not the whole. Please, take this up with a real estate type lawyer. They can review the entire contract and advise you. Based on the wording you posted, you agreed by signing contract to the site work as contractor charged. Not a “allowance” item but basic condition of the contract. I don’t believe you are going to win this fight. So you can try to get out of contract by mutual agreement or potentially get sued for breach of contract. You aren’t alone. Most people do not read much less understand these contracts and find out later they are written to the advantage of the contractor not the buyer. I know this isn’t what you want to hear. Might be time to cut your losses if you can.

do yourself a favor and sit down with the builder and ask your questions.

Jeffrey Grenz

I'm about to do just that. I wanted to know what people thought about the price I'm being charged.

It's probably high. If you feel it's REALLY high, then negotiate. that's your best option, IMO, if you want to continue with this build.

Then - amend the contract / get in writing, etc something that talks about how COSTS and overruns are handled - i.e. "the overruns shall be charged at actual cost to the builder plus 15%" or something like that. Right now, it's 100% open ended. As are change orders that have a fee, but don't cover what they can actually charge you.

Thank you all for your comments. I had my attorney look over the contract. He says that it looks like we are responsible for the cost of the project but not at any price the builder chooses. We can hire someone else ourselves, but that it might be hard to find a brickmason who would want to finish someone else's job.

I still haven't heard back from my buildersince I sent him my breakdown of the costs and told him the charges were too high.

Keep us posted. Once he realizes you have done some research he/she might say, when i looked back at these invoices, i found some errors. And a better price might be forthcoming. Hope so!!

Don't wait for him to reprice.

Figure out what you feel is reasonable. Have your attorney draw up a contract addendum that applies to this to have it come out at that reasonable point and all future such situations in clear straightforward language. Send it to the builder for his signature. You'll send him payment when he signs.

It's not logical to expect him to be the reasonable one base on his behavior. Take the initiative. Legal language is meant to direct and limit behavior to get the job done. Not to change an individuals personality.

Dan1888

Thank you.

I would advise against drawing up a contract addendum prior to negotiations. Everything that is happening right now is a signal between you and the builder, so remember he only has to build the house, you actually have to live in it. It is OK to signal that you are going to be firm and by the book, but I would avoid elevation to PITA as long as you can.

Your contractor has a signed contract and little reason to sign an addendum that isn't favorable. In fact, were I his attorney I would advise him not to sign it unless he dictates the terms. I would personally advise you to compromise by being firm but reasonable. This portion of the contract is most likely on a cost plus basis, so just ask for the line item breakdown and supporting invoices from the subcontractor. Don't be contentious about it, just make it clear that you expect transparency in billing for any cost plus items.

However, understand it is a little bit of a rigged game. Subcontractors don't necessarily have to charge the going rate on change orders either. For example, I have seen many subcontractors bill for a half or full day of labor no matter how long the job takes, or bill at the overtime rate because their schedule is tight, or even a combination of both.

As for the contract. to really comment I would need to see the entire contract, not just the portions that you believe are relevant, even then my advice would most likely be listen to the person who has experience practicing law in your area.

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Finally, your estimates seem a bit low to me.

I live in the land of brick, they brick everything from driveways and mailboxes to houses and sheds here. Brick masons are cheap here, and $8.50 per square for time and materials would be appropriate for a good experienced brick mason. Add in change order fees and builder's margin and you can get $6,800 on the brick pretty easily assuming that the subcontractor doesn't have a rate premium.

I think you are being overcharged a bit. However, I don't think you are being overcharged $7,000. I think you are probably being overcharged by a couple of thousand dollars, and you should keep that in mind when you speak with the builder.

Good luck

Sending him the addendum ready to go needing only his signature to receive payment and get the work going again is negotiating. You can then see what his response will be. Better to cut your losses now in the worst case then to continue with an unreasonable participant. He won't want to go to court to force you to continue the contract just so he can bleed you to death if you'll fight him all the way. Stand up now.

Never ever invoke the nuclear option unless you are in the winning position. Having signed that contract, you are not in a winning position to be able to make any demands.

You refusing to pay would have you be the one in breach. You only agreeing to pay if he signs an addendum is extortion. He is rightfully due those monies, according to the signed contract. That’s a quick way to get arrested.

Not to mention that it invokes an immediate emotional go pound sand response. And your house is the loser here with you creating an adversarial relationship rather than a team one.

It is important to remember that your goal isn't to win a fight, it is to get a well built house for an amount of money that you can live with.

You and your builder have asymmetric information, you are NEVER going to win a battle with your builder, unless you also happen to be a builder with a lot of extra time and even then the juice isn't worth the squeeze.

When people come to me for this type of advice, my advice is often the same, "don't get so caught up in winning that you forget what winning actually looks like." When you start down the path of playing "will he" or "won't he" sue me, you are firmly on the path to losing. It is then just a matter of how much you lose. That path may well be inevitable for you, but since you have an attorney who has presumably read your contract, he is the person you should be listening to for legal strategies.

However, even attorneys can get a bit near-sighted. Just make sure you are tunnel visioned on getting the best home you can for an amount of money that you can live with and you will probably be fine.

Sound advise here. It is consistent with my thoughts and experience.

The contract I provided above IS the whole contract. the only thing I left out was the pages showing the selections and the allowances. Other than the numbers, there is no more contractual language on those pages.

I spoke to the builder today. He has proceeded to finish my block and brick work without my signing a change order. Per my contract, I am responsible for anything outside of the contract. It does not state that I must have them do the work, nor that they can charge me whatever price feels good to them.

That being said, he did admit that the pricing was high, and I will likely end up saving around $7000 if he stays true to the numbers he gave me today. I get the feeling he knows he messed up by doing the work without an agreed price signed off on.

What did i say?? Sounds good to me!

Is the foundation and brick listed as an allowance? Do you have a copy of all the allowance items? I would be concerned with the contract you have. Just a couple pages, lacks so many important items. How changes are handled, cost of any changes, just to name a few. Contract says you have authorized the lender to disburse payments to "Value". Who is responsible for verifying the amount of the draw compared to the work completed? Did you notice in section 19- basically says that "Value" will provide you with a copy of the allowances once they have completed the work and the work has been paid in full. There are a lot of issues with this minimalist contract! If you can't get the builder to agree to make addendum to the contract, then take lots of photos and document everything. Follow up all phone calls with a summary email.

This is probably a rookie builder making rookie mistakes. But you are on wrong side of this deal.

Watch the Change Order Scam section of this video(starts at 11.40) and start protecting yourself now. You can do that by getting quotes and bringing in a different sub for any and all work this guy wants to scam you on. Exercise your rights. But for those reading about this problem put everything in the contract ahead of time. What's included. What's not included. And how changes get handled. To the OP- send an email memorandum of the deal you think you're getting on this block work immediately after you discuss it with your builder and on any other change to create a record of your agreement.

Yep, it's a terrible contract from the owner's perspective. Always amazing how many consumers sign construction contracts which are totally a builder's favor...

Too late for that now, and the OP will need to follow some of the good advice above.

In my opinion, it isn't a good contract but it isn't weighted to the contractor per se. The information that we don't have is the compensation information for cost plus items. As written, the builder is only able to pass his costs along to you without any builder markup unless that information is on a different portion of the contract. I don't see how the above video is really applicable in the contract as written.

All allowances are owner estimates only. Should the cost exceed these figures, the Owner shall pay the additional costs. If the costs are less, the Owner shall be credited accordingly.

The word cost has a very specific meaning in contracts. It means the actual amount paid by the contractor less any trade discounts. There is nowhere in that contract for him to make money. In fact, the biggest problem I see with this contract is that it favors the homeowner way too much, there are things in the contract that say cost which should very obviously say all applicable fees.

The change order fee presented above is $150 and that is all of the fees applicable for change orders that the contract as presented has. For a contractor rated as highly as this one appears to be, and for the bare bones services they provide they are rated pretty high, I am surprised they are not much more protected by their contract.

This isn't going to be an easy build because of the ambiguity in the contract, but it doesn't have to be a big fight either. I gave the advice earlier and I suggest that you follow that advice. Let the contractor know now, that you expect transparency in all allowance and change order items, in other words, you want to know final payment to subcontractors after trade discounts or rebates.

As for an addendum, talk to an attorney who is experienced in construction, but I don't see you getting a more favorable contract than you currently have.

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As for the change-order game, it is kind of crummy, but the video leaves out one vital piece of information. Does the client end up paying more that they would have sans the change order game? Does the competition, who underbids jobs and makes their profit from change orders charge more or less than he does when all is said and done.

The idea of offering a basic service at cost and upselling isn't new, it is one of the oldest and most widely accepted business models on the planet. Everyone from accountants to car dealers to builders to clothing makers have things like this.

It is kind of crappy because they are using information asymmetry to engage in non-competitive bidding, but I managed a lot of capital improvement projects and it wasn't that hard to protect ourselves from this practice by demanding a cost basis approach to change orders.

To reference contract terms during the project is failure by both parties.

Keep the lines of communication open. Consider face to face over a call, call over a text or email.

Bry911 and I seldom agree on anything--which makes life here interesting. But his advice about your existing contract and your strategy for going forward is very worthwhile to consider and discuss with your attorney to develop a win-win strategy for going forward.

The problem with your construction contract, simply, is that it is vague and doesn't cover many situations, including the one you are facing. The terms and conditions are vague; the language used is vague; and it's all subject to interpretation. Since you signed the agreement, you're bound by it...but what does that actually mean?

Thus, instead of litigation, or trying to renegotiate the terms of the contract, your most productive strategy may be to find a win-win approach with your attorney before contacting the builder.

Consider: this may be only the first sort of these "extra expenses" during the term of construction.

Inexperienced home owners seldom can outfox a builder, who will simply shave quality and costs in ways you will never know or see during construction.

Look for a win-win approach with your attorney.

Virgil Carter and i totally agree. I would just add i would consult with good real estate attorney but i would hold that action close to my vest. If you dangle that to the builder you will not improve your situation in fact Will cause an equivalent negative reaction. Get educated but hope you can find win/win solutions to all the issues that always arise during a construction project.

"who will simply shave quality and costs in ways you will never know or see during construction."

Exactly, you may win the battle but the war will be ingoing and he had the odds in his favor.....................

The frustrating thing is that I was meticulous in making sure that the costs for everything were in the contract. My mistake was in not knowing about the HOA's brick crawl space requirement.

At the moment my builder has no idea that I've contacted my attorney. I'd rather try to work with him to get the price down. I'm not looking for litigation.

They have gone ahead and finished the crawl space and brick without even having me sign off on the price. That seems risky on their part. What if I say I won't pay for it? I have the right to hire my own brick mason to do the job. They don't have the right to just go ahead and do it. I won't refuse to pay, but the amount will have to be comparable to what I could have paid someone that I hired.

I contact the builder primarily through email so that I have a record of what's going on. I've already had to use that a couple of times.

Sorry, but I do not get a warm and fuzzy feeling on this project. Red flag's already are not a good sign. I am not taking sides and we are only hearing your side, although not saying you are not 100% correct. But something about the entire process doesn't pass the smell test in my opinion.

It’s not really that risky on their part though at this point. They kind of hold more cards right now as it sounds like this is a “fixed price” contract (which will always have overages). I assume you don’t yet actually own the land. So, if you don’t pay, they can decide you are in breach and either demand you remedy the breach or will just accept the breach as termination and sell the house to someone else. Sometimes the latter works out better for them anyway.

Where does contract say you have right to hire your own brick mason? If the case above is true and you don’t actually own land and building until close at end of construction you actually don’t have that right. The builder owns the property. They have their own GC. You are NOT an owner-builder or GC here. You don’t have an automatic right to bring in your own subs to work on what is still their property. Not only for liability reasons but....because you don’t yet own it.

@bry911’s advice is good. This contract is not as typically builder-favoured as most I see but that does not mean it works great for you either. It would be interesting to know if any of your pages of specifications and allowances address situations like this though. You think those pages aren’t important as they don’t consider what you see as “contractual language” but they are because they are part of the contract both for what they do and don’t say. It’s okay, it is common for my own clients when I first meet them to believe they know what is or is not included in a contract too and be surprised that I don’t take them at their word and actually want to see all the paperwork and decide for myself what is or is not relevant to their case.

They have gone ahead and finished the crawl space and brick without even having me sign off on the price. That seems risky on their part. What if I say I won't pay for it? I have the right to hire my own brick mason to do the job.

I am with Rai Kai on this one, it really isn't that risky.

First, I think you are going to have to pay for it. Your contractor has certain legal rights and responsibilities that don't have to be spelled out in the contract, one of those rights and responsibilities is a duty to act to mitigate losses. In reality this means that a contractor gets to make any changes to the build that are necessary to keep the build going and you have to pay reasonable amounts for them.

Next, you note that you can hire your own mason, but I don't see that in the contract. In fact, it appears he has to approve the people you hire. He is not going to approve a separate mason to do partial work, and if he would approve that, I think it would be a sign of being a poor builder. The house is built on this work, it is completely within a contractor's right to say no, we are not going to let you hire your own mason.

We are considered co contractors with the builder. They did not purchase the land for us and finance the project. The construction mortgage is in our name and the land is part of that contract. So far we have personally contracted out the land clearing, culvert install, driveway, and the surveying. We will be hiring people to do the septic system and other projects before the house is finished.

Here is the allowance sheet from my contract:

This is the strangest deal I have ever seen. It appears you are the "Project Manager/constructor" and you are using this company for subs to your deal? Did you have an attorney help you build this deal?

I suspect this is a minimum services contractor/construction manager, kind of similar to ubuildit.

The contractor is still going to have the right to make certain decisions on your behalf. Many banks require the use of minimal construction services for this very reason, to move construction along.

This is not the last time he is going to make a decision in the field on your behalf. Make sure you are on the same page beforehand, because if you are relying on your approval and that contract to protect you from his decisions, you are going to be one sad panda.

"...We are considered co contractors with the builder..."

Well that helps to understand the situation and the unusual nature of the "contract".

The "contract" is so open ended and vague that an elephant could wander through it and hardly be noticed...pandas should always be wary of elephants.

This just turned into an even bigger issue. A build can only have one builder, just like a ship can only hav one captain. Either he has the reins of power and can hire and fire, and make decisions, and pay subs, or, he can’t. If he can’t do all of the above, and you reserved some of that as your responsibility, then your job went off the rails before one shovel of dirt was dug.

It’s a Giant Red Flag that anyone competent would agree to something like that. All of the good contractors are working 80 hours weeks and stretched thin as can be with a 9-24 month waiting period.

This just gets more and more curiouser, and alarming. And over budget.

As a co-contractor you can help move the project forward in a pro manner by identifying areas of each part that may need changes. Check with the subs. And you can have a bid ready for comparison or to have the work quickly done if necessary. You didn't do anything on the block change. You should pull your weight if you want the benefits. You can do that by finalizing the bids and subs for the portions you listed as your responsibilities. Work out scheduling with your co-contractor the builder. Communication is paramount.

Dan1888

I indeed did work on the block job. I was waiting for 3 months to get their price for the job. Then, without telling me, they just did the job with no notice, before I knew the price and had signed off on it. As for the rest of the house, I have a list of items that I'm responsible for getting done. The job has never had to wait for me. I make sure they're done when it's time. I expect my contractor to do the same. He doesn't. It's taken 4 months to get a simple crawlspace done.

It sounds like when you recognize a change or addition comes up he's not going to jump to get the extra for quickly completing it. You can get multiple estimates and alert him or not to the best one. And then proceed with the work as needed. Some protection there at least.

curious on the result of this. I think I am contracted with the same company as you and just found out a month or two after the foundation was finished on a 2000 sq foot house that the over height foundation charge is 23K. I was aware a charge was coming but just found out now after the framing, roof and windows is already complete.

I haven't done anything yet. Just got a sticker shock for the amount.

This is on a flat piece of land and the need for the over height charge was because the soil had roots and was soft.

Randy, is there any chance that you're building with a company with the initials VBH?

We finally moved in at the very end of 2018. I can't remember the numbers, but I refused to pay what they were asking and we came to some agreement. I would not build with them again.

Lewis, That is correct. Things are going mostly well besides that. Thanks for your response.

Good luck on your new house!