If a builder signed a contract to build a house and a detached garage, then tried to pull out because of funding problem

[paulbunyan]

Originally Posted by spencgr

Every contractor uses those documents, but you have the right to make edits before you sign. A contract should be something both of you agree to. We make modifications to the AIA documents all of the time.

Ahhhh. Wish I knew that before. Hindsight is always 20/20

[ACWhite]

I would try to find another attorney. $7500 upfront sounds as if that attorney doesn't want your business, but someone else who is competent and experienced may be happy to review your documents and advise you for less than that.

[paulbunyan]

Originally Posted by ACWhite

I would try to find another attorney. $7500 upfront sounds as if that attorney doesn't want your business, but someone else who is competent and experienced may be happy to review your documents and advise you for less than that.

LOL. That's what I do when someone offers me a job and I don't want to do it.

[NovaOne]

Sorting out a messy situation costs money - this is fine if the clients have deep pockets and there are opportunities for lots of billable hours. Here we are talking about a project with a total value of about $200k. Any loss or damages brought about by the builder's failure to execute the contract fully would be a minor fraction of this $200k amount, and the client is likely only willing to spend a minor fraction of this minor fraction.

This is an unattractive situation for a lawyer to deal with. He'd rather you just went away, unless you are willing to pay $$$ to retain his services.

Personally, I recommend working out a way for the builder to finish the build, even if it doesn't strictly follow your contract. The expense and complexity of the legal system is such that it encourages the parties to work out a solution in private rather than through the courts. If he needs to build it in two phases, is it all that bad? So you are without the detached garage for a period of time. How much pain does that cause you? Perhaps the builder can throw in some extra upgrades that are mostly labor intensive, such as arches, trim, painting, and etc.

[spencgr]

Originally Posted by paulbunyan

Ahhhh. Wish I knew that before. Hindsight is always 20/20

Out of curiosity, what research did you do (either on the process or the specific contractor) before you moved forward with hiring someone to build you a home?

[NC211]

Hate to add a few more rain drops on your parade here....

But don't forget...your lender is expecting a garage too, and is basing your loan amount not only on a loan to cost basis, but an expected loan to value too. Do you have a copy of the appraisal that the lender used to make the loan? How much value does the garage bring to the property? Deduct that amount from the value. If the builder is saying that your total budget will now only cover the cost of the home itself and no garage, then you've got a builder problem.

My advice to you, beyond the lawyer rec.... call your lender too! The money, has the biggest voice in this situation. If you don't let your lender know what's going on, you could be (pretty much guaranteed) walking into an even worse situation.

I don't know much about residential development of this nature. I focus on commercial. However, in the commercial world, there are certain contracts that a General Contractor usually provides to keep costs containted. Some call them "GMAX"...for Guaranteed Max Price. Any costs above that amount for builder error, and the builder has to honor it on their own dime. Builders must be fully bonded too for situations like this. I find it funny that your builder did not know about zoning/development/regulation requirements associated with the size of your project and the process involved. You don't want to hire a builder who is using you and your wallet to help them get over the learning curve.

Hitting a physical problem is one thing. Like finding out your home site is actually an unmarked graveyard. Or in a renovation program, finding out there is mold behind an old wall. Not knowing how to build a single family home to comply with rules and regulations of the local authority, is another. It suggests ignorance on the builder to understand what they do for a living. I've run into that recently in my own neighborhood, and the builder, a National Flag, isn't too happy that I know exacty how to make sure they correct their problem. It has the real potential of costing them a lot more than what you're looking at, to the tune of needing another comma in your number.....

[Hersh]

From someone who works in the banking industry....

Definitely call your lender and talk to them about this situation, and include them in any negotiations with the contractor about splitting the project, different phases, etc. You could easily end up with major issues with permanent financing. The lender may be able to help you work out a plan to help the contractor through the problems.