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Custom Home Build contract cancellation too costly

8 years ago

Please give me some advices on this matter.

Two months ago, I contacted a builder about building my house. He gave me a list of banks in the area that make construction loans for custom homes. I applied for loans from 1 bank and 1 mortgage lender. The builder always promptly helped me with several documents required by the lenders. He bank also ask for a signed copy of the construction contract with the builder. The contract asked for a 3% initial down payment ($8000) and I would lose it I cancel the contract for any reason.

I wasn't able to get the loan, but I was able to get finance from family members. However, a couple of days before the excavation, my father said he couldn't loan me the money (1/3 the cost to build the house).

I told the builder to cancel excavation and I can't build the house any longer. The builder said he has put in a lot of time to send in document required by the loans and he has also scheduled his people to work on the house.

I know the only contractor he scheduled was the excavator because we haven't put in any bids besides that. We were going to ask for foundation bids next. Now he sent me an $10,000 invoice for his time up until now. He is charging this on top of the $8,000.

Do you think this is a lot? We haven't even excavate yet. I thought sending in documents for loans were some tasks builders do without charging any fee. He never mentioned he would charge me for that service and it's not on the contract either. If I can't get a loan, then he would be out of a job.

Sorry for the long post. Thank you in advance for your help.

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