Any builder that doesn't pass along these increases is a fool.

I'm not questioning passing along these extra costs, I'm just curious what other peoples experiences are and when their builders are collecting. We just got hit from our builder with invoices totaling $200k in commodity increases mid build and he says he will not continue to build until these are paid. Our contract states "The owner shall make final payment of the Contract Price, which shall consist of all amounts not previously paid, and shall be due on the date that the Contractor delivers to Owner a COA."

Verbo, I understand and appreciate your comments. Is this something the builder should explicitly state in the contract "all changes in estimate costs are due asap" or something along those lines? Or is this something that is understood. We are trying to adhere to the existing contract that does not address this issue directly. Will be speaking to an attorney and our builder this week to see where we stand and and what our options are. At the end of the day, we just want our house built and will pay what we owe due to cost increases, it is a matter of when.

Regardless of what the contract says or doesn't say about the timing of paying the additional costs, you really should want to pay them sooner (paying for work that is done!) than later.

If you pay at the end, you are asking the builder to be your banker too. He has paid for the work. If these costs get too high (whether it is all on your build or from multiple projects), the builder will eventually run out of funds and not be able to finish your build (or anyone else's). It would then be much more difficult (and costly!) for you to find someone else to finish your build.

Another disadvantage of paying for all of the increases at the end is that it disincentivizes your builder from keeping you informed about them. And then you get hit with a huge surprise at the end of the build.

@D H - It is impossible to answer this question without actually seeing the contract. There really is no standard materials escalation clause. There are a variety of different materials escalation clauses and so the real answer to your question largely depends on what is in your contract.

The two commonly accepted due dates for materials payments are (1) installed, or (2) on-site and ready for installation. In times of scarcity or long lead times that may even get pushed to anytime after the contractor makes payment for the materials even if they are not on-site.

One of the biggest problems with escalation clauses is that the contract has to establish some reasonable baseline cost and you have to define how the price increases are handled. For example, is it a materials only price increase or does overhead and profit also increase? One of the things that makes this difficult in a fixed price contract is that you have to provide your original budgeted material cost and the price increase is calculated based on that. Essentially this means that the original materials package must be produced with the original prices and then adjusted. This can be problematic for several reasons.