Contract question on fees after inspection for renovation
T J
last year
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Cost Plus Fixed Fee contract
Comments (25)All construction contracts must have a termination clause otherwise when one party whats to terminate the contract (and it might be you) no one will know how to resolve the outstanding issues without going to court which will benefit no one. Don't let the contractor make up a one sided contract; get a professionally prepared contract and use it or copy the relevant portions of it. Here is the termination section of an AIA 107 Cost of the Work contract: "ARTICLE 19 TERMINATION OF THE CONTRACT 19.1 TERMINATION BY THE CONTRACTOR If the Owner fails to make payment to the Contractor for a period of 30 days, the Contractor may, upon seven additional days' written notice to the Owner, terminate the Contract and recover from the Owner payment for Work executed and for proven loss with respect to materials, equipment, tools, and construction equipment and machinery, including reasonable overhead, profit and damages applicable to the Project. 19.2 TERMINATION BY THE OWNER 19.2.1 The Owner may terminate the Contract if the Contractor: .1 persistently or repeatedly refuses or fails to supply enough properly skilled workers or proper materials; .2 fails to make payment to Subcontractors for materials or labor in accordance with the respective agreements between the Contractor and the Subcontractors; .3 persistently disregards laws, ordinances, or rules, regulations or orders of a public authority having jurisdiction; or .4 otherwise is guilty of substantial breach of a provision of the Contract Documents. 19.2.2 When any of the above reasons exists, the Owner may, without prejudice to any other remedy the Owner may have and after giving the Contractor seven days’ written notice, terminate the Contract and take possession of the site and of all materials, equipment, tools, and construction equipment and machinery thereon owned by the Contractor and may finish the Work by whatever reasonable method the Owner may deem expedient. Upon request of the Contractor, the Owner shall furnish to the Contractor a detailed accounting of the costs incurred by the Owner in finishing the Work. 19.2.3 When the Owner terminates the Contract for one of the reasons stated in Subparagraph 19.2.1, the Contractor shall not be entitled to receive further payment until the Work is finished. 19.2.4 If the unpaid balance of the Contract Sum exceeds costs of finishing the Work, including compensation for the Architect's services and expenses made necessary thereby, and other damages incurred by the Owner and not expressly waived, such excess shall be paid to the Contractor. If such costs and damages exceed the unpaid balance, the Contractor shall pay the difference to the Owner. The amount to be paid to the Contractor or Owner, as the case may be, shall survive termination of the Contract." --------- In a Cost of the Work contract, the contractor's proposed cause about cost increases makes no sense and makes me wonder if the contractor understands how a Cost of the Work contract works. Perhaps the contractor means that when costs are greater than the "Budget Estimate" the owner pays the up charge but that is the definition of a cost of the Work contract. Or there might be a Guaranteed Maximum Price that he hasn't told us about. If both parties do not know how to structure a contract (and this appears to be the case) I suggest hiring a design professional or lawyer to advise you in order to avoid unnecessary costly disputes later. This post was edited by Renovator8 on Wed, May 28, 14 at 9:18...See MoreSellers - how much did you pay after inspection?
Comments (12)A home inspection is not a code inspection by nationally accepted standardsÂ..and all state licensing. It is a popular fallacy that inspecting for code is part of a home inspection, but it is not...it is beyond the scopeÂand usually states as such in the pre-inspection agreement that should be provided to the buyer prior to inspection. It is indeed an inspection of the major systems and structure of the homeÂÂas well as an inspection for safety issues. While safety issues are often code violations, depending upon where one resides and their city/town code, a safety issue may or may not be a code violation. Realistically, no home inspector can be expected to know the code variances for every municipality in his/her state, and to keep on top of the constant changesÂ..which is why most municipalities have their own licensed code officials who are knowledgeable about the local code requirements. In addition, older homes have an inherent number of code violationsÂÂBUT they are grandfathered in are if they are original to the home and only must be brought to current code if a renovation is performed. This does not mean that home inspectors know nothing about codeÂsome know quite a bitÂsome know next to nothing. However, if they are not trained as code inspectors any code violations that a home inspector pontificates upon should absolutely be verified as such by the local a municipality code inspector, before any funds are spent to make changes. Anything cited as a safety issue should come with an explanation as to why it poses a safety hazard. Logic dictates that anything that compromises safety should be repaired. Last but not least, in such a buyers market, it really would behoove sellers to make all repairs beforehand, leaving little if anything to interfere with the deal once the findings of the home inspection are provided to the buyer....See MoreContract & Inspection?
Comments (5)From what I recall, in NY, the chain of events are as follows: The buyer makes an offer. Once the seller accepts the offer, the buyer is required to put down a binder. There is a binder contract, and from what I recall from 10 years ago,it is fairly basic and seems to only serve as an agreement on the offer and I think closing date. The the buyer THEN schedules the home inspection and any other inspections such as septic, etc. After the inspections, the buyer decides if he/she wishes to move forward with an actual purchase contract. If so, at that point, their attorney would identify in the contract any issues that the buyer wants the seller to address...in terms of repair, replacement, escrow or price reduction. The seller can than agree..or not..and the negotiating begins... At least that is how it worked 10 years ago...things may have changed. If you are working with a REA he/she should have explained the process....See MoreContract & Inspection -- house in Edison NJ
Comments (8)Maybe things have changed, but when I lived in Jersey you had to have an attorney represent you as well as the seller in a real estate transaction. Even if that is no longer the case, you're nuts not to have a real estate attorney represent your interests. The lawyer can cost anywhere from $1500 to $3000 depending on who you hire....See Moremissb_remodeling
last yearTrinity Builders & Design, Inc.
last yearJoseph Corlett, LLC
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