Builder's Contract
angela12345
13 years ago
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macv
13 years agolast modified: 9 years agoathensmomof3
13 years agolast modified: 9 years agoRelated Discussions
Appropriate to ask for a sample of a builder's contract?
Comments (29)Amen imwonderwoman! When we got hit with the first $54K lien from a supplier that our builder had taken a draw pay months earlier, our banker suggested that we pay off the lien using additional funds from our loan so long as builder agreed that he would forego his next draw (for a similar amount) and pay those subs and suppliers out of his pocket. We did - but then, for over three months builder NEVER finished the work for that next draw and the part that was finished he never paid for. We wound up paying that part too - after we fired out builder. Even having your architect act as "contract administrator" won't protect you if you get an unscrupulous builder who is willing to present bogus lien waivers from subs (ones he filled out himself and ones he got by giving his subs rubber checks) in order to collect his draws for "finished work". Nor will having your architect act as your contract administrator protect you if your builder skimps on things like tyvek and insulation and then covers over those things with the next layer of materials. It won't protect you when your builder purchases stuff for a spec house he is building for himself and has the materials delivered to your house so that when the supplier doesn't get paid, the leins get placed on your property instead of his! Typically the architect who is acting as contract administrator will make a certain (limited) number of trips to check on the build progress. They don't go out every day and watch everything like a hawk... which is the only thing that would even possibly have stopped my builder from pulling his shenanigans! A contract administator will also intervene to clarify what the specs and plans MEAN if there is a disagreement between builder and owner. IF the builder doesn't care what the specs say, then having the architect insist that the plans be followed won't do the homeowner any more good than the homeowner insisting that the plans be followed. I chose not to hire my architect as the contract administrator b/c, in fact, I had designed the house myself and then taken it to the architect to vet it and get the engineering done. I like my architect but I KNOW the design better than he ever did. After discussing the option of having him administer the contract, I felt that I could do at least as good a job as he would. And I still believe that. IF our builder had had an ethical bone in his body, administering the contract would have been a breeze. As it was, no one could have reined him in. He was robbing Peter to pay Paul and I was the last one in line. He was desperate to build my house as cheaply as he possibly could while getting as much money out of me as fast as he possibly could so he could try to pay off his lawyers who were attempting to protect him from two other lawsuits by aggreived homeowners. He declined to tell me about those when I asked, before we ever signed our contract with him, whether he had ever been sued! Two weeks into our build, I had already become convinced that we had made a mistake. I talked to my husband about firing our builder before things went any further. DH wasn't convinced. Two months into the build, DH had become convinced we needed to fire him. We talked to our banker to find out what we needed to do. Our banker insisted that we could not fire the builder b/c then our house woud never get built. As imwonderwoman discovered, in a certain sense the bank OWNS the house so they are in the driver's seat and they don't really care so long as it gets "finished". The homeowner is then on the hook to pay the bank for the house regardless of how badly built it is. After I realized what a scum-bag we had hired, I did my very best to go to the build site at least every other day. It was amazing to me just how much stuff my builder could screw up in 48 hours...when he was working at all. After our banker told us we could not fire him, I basically quit my 60+ hour per week job so I could be at the build site nearly every day. Once I started watching every single thing that was done - and documenting it all with a video camera, my builder QUIT work. Then the liens started coming in. It took another six months with almost no progress and lie piled on lie piled on lie - and my banker continuously telling me that we HAD to find a way to work with the builder to get the house finished - before I got fed up enough that I decided that I no longer CARED what my banker said. I was going to fire the builder and then figure out how to work things out with the bank. So I sent the builder a certified letter telling him he was fired, then notified the bank that I had done so. It then took me several more months before I could convince the bank that it was in the bank's best interests to allow me to take down the rest of the loan and finish the build as my own contractor. By that point tho, I was so broke I had to go back to work full time. So now, almost a year after firing my builder, we are finally getting close to getting the house finished. It will NEVER be the house we contracted for. We've downgraded almost every finish level since taking over in order to save money and try to bring it in within our budget. For example, I found tile for 99 cents/sq ft and hardwood flooring for $4.49/sq ft. And, DH and I have done a lot of the work ourselves on weekends instead of hiring it out. Still, between attorney fees, paying off liens that should never have been filed against us, and paying to fix some of the blunders builder made that we simply could not live with, the house will wind up costing us about 25% over the fixed bid price. And no, we did not accept the "lowest bidder." We got three bids, the two higher ones were within $10K of each other. We accepted the HIGHER one because we thought the builder would do a better job. HAH!...See MoreVague Builder's Contract - Please Help.
Comments (37)Sorry about your loss. If you want to see the full version of the contract I outlined, you can buy a paper copy of AIA A105 at the link below for $8.00. There is nothing wrong with crossing out what you don't want and adding supplemental provisions or clarifications on attached sheets as long as they are dated and referenced in the main Agreement. Be sure all parties initial in the margin where changes were made and make three signed copies. All standard contract forms provide a space for an interest rate to be entered for late payments to the contractor and that should be sufficient for any builder. Adding 10% to the entire bill after 5 days is obviously an onerous penalty and since the builder doesn't get a discount on most of the cost of construction he can't truthfully say it is due to lost supplier discounts. Window suppliers generally require half at the order time and the rest upon delivery. A 10% penalty is a huge red flag and a deal breaker. Be thankful the guy showed his stripes early. All AIA contracts naturally provide for an architect but that can be modified. I hope you will have someone advising you during the construction phase since even good contractors make mistakes and it is not realistic to ask anyone to put your interests above theirs and building inspectors have no obligation to you to find errors in the work contrary to popular opinion. An Allowance is like a small Cost Plus contract inside a Fixed Price contract so avoid Allowances if at all possible and make the builder bid as much as possible up front. When you must use them, determine the quantity and general location of the items now (even if in narrative/list form) so the labor/installation price can be included in the base bid and the Allowance will only be for the cost of materials. Listing Unit Costs (like a per s.f. cost for flooring installation) can help too. This is the only time the builder will be motivated to keep the prices down so don't waste that advantage. The buy-out of an Allowance item should be resolved by Change Order whether it is higher or lower than the Allowance amount since it changes the contract price. I like to add a third option where a full credit is given and the Owner can supply the material. Sometimes this is the only way out of a difficult negotiation with a Sub. If he knows you can walk away he will try harder to please you. In my opinion a Fixed Price contract with lots of Allowances that include labor is the most lucrative contract type for a builder assuming he can get kick backs from his subs. I even had a contractor ask me for a kick back because he recommended me for the project. Good luck. Here is a link that might be useful: AIA A105...See MoreSigned Builder's Contract, Now To Make Experience Enjoyable?
Comments (4)Let's see... 1) Only read the happy posts here if you want it to be fun. Otherwise you'll have your mood dampened. And you'll start worrying about things that might never come to pass with your build. 2) Go live far, far away from the building site, where you cannot be contacted. Leave your cell phone at home. Give a Power of Attorney to someone who will have the authority to make all decisions, execute all documents on your behalf. 3) Plan fun, busy, yet relaxing things to do while you're away. Like on the extreme makeover shows where they send the family away to have fun while they build their house. They'll bring you back when it's time to move in! That's about it. Since you will NOT do those things, or cannot do those things, here are my alternative suggestions: 1A) Decide how much of your time and life's energy you are willing to devote to the build. As you go along you'll learn how to adjust those personal resources to adequately meet the demands of your tasks. Heed the word 'adequately'. Aim to do the least possible; lower your standards; keep everything simple; decide that some things can be done badly. How shocking! 2A) Clear your and your family's schedules for the duration of the build--not just the builder's projected timetable. Because during the build you will have lots of "little emergencies" and "we need a decision by tomorrows" to contend with. If little Johnny has taken up martial arts in addition to another after-school activity, the whole family will suffer. Everyone must scale back their schedule. Everyone must have unscheduled time that is available for the demands of the build. They will feel put-upon, and act martyred and you will feel guilty. But the family will fare better for it. Plan some fun, easily taken up and put-down family activities to fill any unscheduled hours that remain unclaimed by the build. (You will not do this either, because it seems either unnecessary or too burdensome on the poor children; you--and they-- will live to regret that decision.) 3A) Whichever adult has the most flexible schedule, and/or is thought to be the design whiz, will become the most stressed out one. She should, in advance, write into her schedule, inviolable times for favorite stress-reducing activities every: day (20 mins. 3 x daily); week (1 hour away from it all at least 3 x weekly); a monthly 3-day mini-vacation if she borrows a friend's basement to retreat to and sits by the window sipping tea. You will not do this either, since it seems entirely too greedy and you simply can't get away like this. The entire family will suffer as a result and come to resent you for getting snippy, full of sighs, catching more colds, whatever form of nastiness attacks you when you are overly stressed. 4A) Cultivate your sense of humor. Collect cartoons and funny sayings. Develop a mantra. These things will serve you well. Because while the process might not be FUN, it can at least be FUNNY! Others will fill in here with far cheerier advice than mine. I'm of the school that says, plan for the worst and then you'll be pleasantly surprised....See MoreEnding Builder Contract
Comments (36)To the OP - I would consult an attorney before you do anything else. Even if it is clearly spelled out in the contract that doesn't necessarily mean it is collectible. From your description I believe you are discussing a design-build firm rather than an independent architect. If it is, in fact, an independent architect then their failure to be aware of costs becomes less of a concern for him and a problem for you. I only understand a small bit of Canadian law, which is to say that I understand that contract law in Canada is pretty similar to contract law in the U.S. and that is the extent of my knowledge. In every contract there is a requirement that the parties act honestly and in good faith. Your theory seems to be that they didn't act in good faith during the design phase, because there is a reasonable expectation that a design-build firm has enough understanding of costs to keep them reasonable. Instead they acted to increase the cost of the build so that they could profit from the additional revenues, in both the design phase and the build phase. That is a theory that gets a lot of traction here in the U.S. and no matter the terms of the contract, they can't act in bad faith. Whether or not that this particular situation gets a lot of traction in Canada is something I just don't know, but I suspect it does. Your best bet is to spend just a little bit on a qualified attorney and get this behind you. I wouldn't advise waiting and doing nothing, although that is also viable, if they do pursue it, waiting will just close several doors that are open to you right now. Personally, I tend to be very aggressive on these things and would communicate to the firm that I will subpoena information on all previous design clients if they want to continue....See Moremax_w
13 years agolast modified: 9 years agoathensmomof3
13 years agolast modified: 9 years agomacv
13 years agolast modified: 9 years agoangela12345
13 years agolast modified: 9 years agoathensmomof3
13 years agolast modified: 9 years agoangela12345
13 years agolast modified: 9 years agoathensmomof3
13 years agolast modified: 9 years agoathensmomof3
13 years agolast modified: 9 years ago
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