The short answer to your question is no. You have no recourse. If you have a building loan/mortgage and a building permit and your GC has a license you have all agreed to enter into a contract to pay fees to and abide by the whims of others who provide absolutely no value to either party. If you bring them to court the only winners are the bank, state, municipalities and the attorneys respectively. You and the developer are merely fodder.

Aside from your concerns on the draw it is really impossible to address the issues you are dealing with without seeing all the documents along with twenty seven eight-by-ten colour glossy photographs with circles and arrows and a paragraph on the back of each one explaining what each one was... but even then..., blatant fraud is permissible and consider SOP these days. Unfortunately this s all to common. It's the "Big Dig" (only it's in your neighborhood)

Why do you "need" these extra retaining walls? Are you preparing a neighboring lot for the developer with them or protecting your own structure and lot?

Unfortunately the narcissistic society of acronyms who you would think would help you remedy your situation is closely affiliated with the ones who approved every phase of the development and "inspected" the progress of your home. You'd have better odds taking the $5K and going to vegas.

Ian

We need the retaining walls to protect our structure and lot so as we can have water draining away from our house. Right now it just collects in our yard and as there is house next door, we can't slope the sides.

If this is business as usual, then it needs to change. There need to be better laws protecting people like me.

no, it is not business as usual. You are being taken by the contractor, and it appears you have been from the very beginning, starting at the bid. Did you get any other bids or do you have to use him because he does the development?
To make matters worse, if he does do the builds, he knows the costs, and he knows the need for retainage as well as the drainage issues on the sites. It appears to me, from first glance, he came in with a very low ball number knowing it would be appealing to you, also knowing it will make him more money with markups he suspected you wanted.

Who established the draw limits? I assume the bank? Who do you have the contracts with? the band and the contractor? I would not recommend dropping below a 20% retainage with him. Refuse to.
It really does suck you have to deal with so much. Contractors like this place an extremely bad view of construction in general.
Another that has always blown my mind with residential construction is allowances. When I set an allowance, which I rarely use, I figure out what it will cover and set it accordingly. Allowances are for about everything it seems in residential. IMO more time needs to be spent upfront on the owners/architects side specing or researching products you want and not just going with the contractor. Flat spec it, and there will never be any issues and very little price overruns and adds. Obviously this is far to late in the game.
I would suggest finding a different lawyer. I have used them, and they can be had for much lower then 5k.

Your bank is the one you need to deal with on this. If they are issueing the draws, then the builder is satisfying some level of completion, even if the quality doesn't satisfy you. They won't want to be left holding a mortgage on a substandard structure, so if you can document your qualty complaints, they will take a closer look at the situation. If you cannot document your complaints, then you are out of luck on any front.

As far as the upgrades issue, unless you wrote exactly what you wanted into the contract, you are required to satisfy the terms of the contract when it comes to change orders. What does the contract say about changes? An additional fee plus the cost of labor and materials and profit %? That's pretty standard also. If you wanted different materials, it was up to you to spec them at the beginning of the contract. You are in control of your costs when it comes to upgrades. If you don't want to pay what the builder wants, then don't get the upgrade. It's often cheaper to accept the home as built and then get rid of the builder grade components and upgrade them before you move in.

Yes we are naive, honest, and trusting people and that is why we need protection with laws that prevent naive people like us to be taken for a ride. When the builder told us that the granite allowance was adequate to cover all he had specified, we trusted him. Now we have to pay $4000 extra if we want granite in all the places noted in the contract. We have chosen all cheapest group of granite. But the allowance just won't cover all the areas. The carpet allowance is off by a few thousand even if we go for the cheapest grade carpet. When he included the allowances he said those were based on the contractors discounted price and so we can't compare to retail. Now he is charging us even more than retail for everything. As a lay person how can I know the actual price? We asked him to include the tile as in the model. How do we know that his allowance won't cover it? We can't rip tile out to install later as it would cost us even more. We can't install cheap stuff as we have to compete with similar priced homes in the area (including his 4 model homes) which has quality for the same price as we are selling. We have to take resale into account as even though we may intend to live here for a while, as circumstances may change and we may not be able to afford it.

We trusted him and I guess that was a mistake. It does not bode well for the construction industry if it is considered a mistake to trust builders. I don't believe all builders are this way but they still have to suffer the consequnces of the bad reputation created by some dishonest ones. If this is how business is done then there won't be a lot of people building. As a customer how can I tell if a builder is taking me for a ride. How do I know which builder is giving me the realistic price? Is the builder who has given me a high quote being honest and realistic or is he just fleecing me? Is the builder who has given me a low price being honest or is he just low-balling to get me to sign and then will charge me excessive later. How can I tell who is telling the truth?

That is why it would in the interest of all the ethical and honest contractors to have laws that make builders accountable.

I purchase a Mercedes Benz car, however on pick-up the dealer gives me a Ford with the same specifications. Yes the ford will take me places just like the Mercedes but I paid for the Mercedes. This would not be allowed in the auto industry or many other industries. Then why is this allowed in the building industry?

This also happened to us in our recent build. The builder walked us through his home that he uses as a show home, I asked about if the kitchen, cabinets, lighting, flooring, fireplace surrounds............ were upgraded he said no that was his standard that he put in all his homes. I repeatly asked him over and over again, so we will get this and that's not an upgrade, this is included..... He kept assuring me that it was all included.

Then when we were building with him we went to pick out cabinets and found out nothing in his show home kitchen was standard and to get the same features and quality would be $12,000 extra, I flipped out. In the end we still paid about an extra $2000 that I was not happy about but can't complain too much as we took his word and did not specify it all in the contract. The same thing happened with the all the flooring, the fireplace surrounds, the lighting..... For $700,000 his homes apparently don't include fireplace surrounds or back splashes, would of be nice to know.

And less than a week before close we heard from the installer that the septic system was going to cost another $12,000 that they wanted us to pay before they would finish installing it, in the end it was really $18,000. So here we were needing to come up with $20,000 less than a week before closing, nice. They should have been more upfront and realistic with the allowance instead of letting the installer start and have us forced to pay the over inflated price.

Yeah, I'm still bitter with our builder too, sending you best wishes on your situation .

Well I'm not saying it is right and I agree with everything lzerarc said with the exception "it is not business as usual".

It seems apparent to me that a building permit should have never been issued nor the project gotten to this phase especially considering the number of "officials" that had to review the plans for the development and issue building permits, conduct field inspections etc. They get paid in full upfront don't they? Ever hear of a municipality refunding the application fees or submitting a claim to their insurance company due to their errors and omissions?

While substandard building products are allowed and approved by the ICC, UL et al they are also considered to be the minimal standards and Green is correct that that is your responsibility now.

If you need retaining walls for the conditions you've described it is a much more serious situation than your concerns about the draw and allegedly THE reason why these agencies exist in the first place. To protect "the general welfare of the public". I've seen homes slide off their lots and crash into neighboring homes on serene summer days and not only are the building officials including the city engineers who signed off saying that "everything looked okay" to them held harmless of any responsibility they are often never even to be questioned about their qualification. Engineers and architects are usually "over qualified" for these positions yet someone with a two year degree in sociology who took a 14 hour internet course is perfectly qualified for the oversight of them. Honest, qualified engineers and inspectors who somehow find their way into these positions are often quickly removed from them one way or another because they hold up progress by insisting things are done right. Sometimes the cost of developing a piece of property correctly is more expensive than the ROI so you look for people who will overlook these things in order to get the project approved. New developments mean new money for the banks, states, municipalities and attorneys and nothing more. If the bailouts of recent years wasn't evidence enough that it indeed is business as usual I don't know what will.

The shoring up of the property should have occurred prior to the construction of the home. That is part of what the word "develop" means. IMO the developer is responsible as well as a long line of people who signed off on the project but finding any judges, building officials, attorneys and even juries these days who would agree is next to impossible.

If you do have a construction loan/mortgage with a bank you indeed have a contract with them that supersedes all others. Unfortunately the only interest your bank has in this project is your money. If your house falls down around you tomorrow that is not their problem and they don't care as it is now between you and your insurance company who will focus their efforts on stiffing you instead of trying to recover their losses from those responsible. Even in situations where there is a taxpayer funded "relief fund" for the insurance companies it does not mean they won't be trying to stiff you. All the while you are still responsible for the monthly payments to the bank wether you are able to live in the house or not.

Yes it really does suck that there are many quality builders with integrity who are excellent in their craft who on the same token have no recourse from unscrupulous bankers, building officials, lawyers and even homeowners either and with each new passing law it just makes it worse for both sides protecting only the interests of the banks, states, municipalities and lawyers. Litigation for the most part is merely a bunch of smoke and mirrors. The definition of recourse would be to be "made whole" by those responsible but it rarely works out that way. Those who are "lucky" enough to even get their legitimate complaints before a court and "win" are usually left holding the bag for attorney fees, court costs more inspections and other expenses that are unrecoverable although the law states that you are entitled to reasonable fees for these expenses above and beyond recovering your losses. To the courts $5000 dollars is only reasonable when they are collecting the check and not when they are awarding you recovery of those fees. A win here does not automatically allow you to to bring a civil suit to recover that money either and when the "speedy trial" is finally done somewhere between 5 and ten years later, if you even have the money and stamina to deal with the kangaroo courts that long, it is often so devalued it is not even worth the effort.

I would find it hard to believe that if lzerarc has been in the business for any length of time that he(?) hasn't had the "homeowner from hell" or lost prospective clients because he wasn't the lowest bidder or maybe had too close of a relationship with their architect or what-have-you that have ended up in similar situations. Maybe even had a cease and desist order placed on one of his projects by an inspector who had no clue what they were even looking at. Everyone makes mistakes and often times the difference is that a good builder will cry in their coffee for a moment, pull on the big people pants and laugh about it later. While others will point fingers at everyone other than those that are actually responsible, flip a few hundred buck to an attorney and hit the street as low life LLC all over again. I hate to sound like I am grouping everyone together again as there are many legitimate reasons for honest, quality developers to create new companies for each development too.

There are literally hundreds of thousands of rules, laws, codes, ordinances, principles and practices, agencies, organizations etc. etc.. that are supposed to protect people from these types of situations in many areas of endeavor and were intended specifically to protect the "general public" from unscrupulous politicians, doctors, lawyers, builders, manufacturers etc.. so that everyone doesn't need to be an expert in all things they may ever encounter in their lives and unfortunately they are not worth the paper they are written on.

Ian

i am a commercial architect, so luckily a lot of the emotions associated with home building is absent from my daily practice. But otherwise...yes to all of the above.

You have all kinds of money for these "extras", but not for the retainer for a lawyer? Doesn't that seem a little, I don't know, short sighted? I am sure you can find an attorney for less than a $5k retainer. You need to stick up for yourself. You have recourse, use it. There are laws and civil actions to protect you and you are choosing to not avail yourself of them. How do you think it works? You snap your fingers and get a civil judgment? If you don't have the ability to be your own advocate then HIRE A LAWYER!

You are right, we are going to be hiring a lawyer. We are spooked by a colleagues experience. He has so far spent $88,000 on lawyers fees and still does not have a resolution. He is suing the developer for lot improvement costs of $100,000. In the end even if he wins he is stull out of $100,000 for attorney fees. If he loses he is out of $200,000. The lawyer we spoke to told us if we go to court it could cost us that kind of money. So we went to the city inspector and he assured us he would make sure we have a structurally safe house. The builder gave their office multiple calculations after we complained. So I thought we were ok. But after reading about the experiences of people on this forum, I am wondering if I can trust the city to ensure structural integrity,
Yes, now since the builder is demanding this 9th draw, we are concerned that there is something he is expecting for us to find wrong with the house and then he won't be able to collect the money. I don't know but something smells fishy. We have full intentions of paying him the full amount so that we can live in our house. So why is he telling all his subcontractors that we will not be paying? Is there something he knows that we don't? Am I overthnking this? I am confused and hence I ask if it is normal for builders to not follow contract and ask for multiple draws.

It was not that we did not want to spend $5,000 for the lawyer, it was the endless bills that would add up to $100,000 as it did for our friend with no resolution.

As far as the extras, we have to compete with the houses in the area including the builders. He has sold his model homes with all the upgrades for less than the price we are paying him. At this stage we want to sell the house in few years and we don't want to redo stuff to attract buyers in this price range. We can't have laminate counters when all homes have granite. We were not given an electrical plan by the builder. So we had to pay thousands more. A dinette fixture connection was considered an extra. We had to pay for simple switched outlets in our bedrooms. He put outlets that we paid for in the wrong places and then charged us extra to move it. We were not given an HVAC plan. We met with the HVAC person and marked on the floors where we wanted the registrars. But he put them in places where we did not want. We would have been happy to sign a plan that indicated all these, but he said he does not provide them. So now we are stuck with outlets and registrars in the wrong places.

We did not anticipate spending an extra $100,000 on this house and don't have another $100,000 if we go into litigation.

I think there should be a requirement that before signing a contract all homeowners pick out the stuff for their home, with photographs and signatures on all photographs of items we have selected. There should be no allowances. It is not possible for us to know what is adequate as we don't know what is contrctors price. If a builder says that this lot requires just a small retaining wall then the fact that he has put down only $2000 allowance should be considered as proof that that is what he has told us. If it is the law then I think both builders and homewoners will be protected.

There was a time when signing an informed consent in the medical practice was not the law. So when something went wrong, it was he said, she said scenario. Now it is the law and all patients have to be provided with all available information so that they can make a decision. That is how it should be in the building industry. All builders should be required to provide full information and then get the homeowners to sign off. Things will still go wrong atleast it will be less due to lack of information.

Concerning the structural, you might consider paying for a reputable, licensed structural engineer to inspect your build rather than relying on the city inspector.

Kelly, were any of those extras that were in the 'model house' in the contract?? Is there a way you can post your contract on here....of course without names, adds etc.

My scanner part of the printer does not work too well and I don't know how I would post it. Also the contract is many pages. I will try to see what I can do about it.
The contract includes items as in model home e.g. granite countertops but the allowance is inadequate. So it might as well not have been included. Plumbing fixtures were changed but we didn't realize it. Cabinet style is simple and stayed the same. Lighting allowance was not realistic, and same with hardware.

I know hindsight is 20-20 but a lawyer should have reviewed the contract prior to signing.
Sounds like the contractor is running a scam and I'll bet money he has done this before.
This should be a lesson to all that want to build a home. Get the details in writing, make sure both sides understand exactly what is to be done. Research, research, research! And most importantly, always cover your a$$. The contractor is, so you better too!

You may have to go to the State office that licenses the contractors to see if there are any law suits against him along with complaints. Another thing to check on, it make sure, and get it in writing along with paid recipts from the sub contractors on the job. Do it NOW!! or you might find yourself paying for the materials twice. We did that with our building. DH was acting GC, but NOTHING came on the property without paid recipts from the business the materical were bought from. Don't go any further until you get some good legal advice. Meet the contractor with the bank manager with your paper work and get everything straightened out NOW.

PS. I wrote the checks, not the bank. But the bank approved my doing this. I paid nothing without a receipt. It works! We had a construction loan.

I think anyone considering building a house should be REQUIRED to have learn enough to be able to take responsibility for their own due diligence.
That said, I am truly sorry that you are in this predicament - your story is a lesson for others. When you are investing hundreds of thousands of dollars, you need to know everything you can possibly know about the person and company that you are handing your money to.
And BTW - registers (and returns) for HVAC are not dictated by where the homeowner wants them, but where they work best in the system.
Good luck and don't let the ba$tard win...

I would have a lawyer to review your contract to see if you have a case. I'm not a lawyer, but it seems to me that there's not much you can do about the allowances being inadequate, but if your contract specifies that he pays interest after 12 months and there are only 4 draws then you should have some recourse on those issues.

Can you fire him and get a new builder?

Does your contract have an "arbitration" stipulation? Does it say anything about discrepancies and how they are to be handled contractually?

You may not have to go to "court" - you may be able to get this resolved thru arbitration which may be alittle cheaper.

I have learnt many valuable lessons thru my home building experience, I will not be so trusting and naive the next time around!

GC.....I think your GC is just fleecing you. The guy KNOWS how much things cost. As for the granite, did he just give you a $ number or # /sf? You can go back to the house he showed you where he said all of this is included and measure how much s/f of granite is at that house. If it's the same or very close and the price of the granite you picked out is same/very close, this will give you a case showing that the 'allowance' is not even close to being realistic. Same thing with the driveway.(most neighborhoods have regs requiring the house be set back the same distance from the road. So the driveway costs can't vary very much.