Sunday, September 02, 2007

Suing a Builder-Part II

I have written about suing a builder for new construction previously, but I would like to spell out in more detail the remedies that a homeowner (or even commercial construction for that matter) may have when a dispute arises.

As I have now stated over and over, the place to start is with a good contract. Particularly when new construction is involved, there are usually benchmarks for progress payments. Homeowners should be particularly vigilant regarding those benchmarks, and builders should be clear about which work needs to be completed and whose approval is required before the payment is made. On the builder side, it is nice when those payments are automatic upon inspection (bank or town should be specified). The homeowner may want to include a provision that he/she should be allowed to inspect before payment is issued, but the builder should be able to protect himself at that point so the homeowner cannot have full power to determine the definition of what constitutes completion.

If the homeowner is not happy, he should start out with a demand letter to the builder spelling out the problems, and if in MA, write the letter pursuant to c. 93A. If delay is the problem, then the homeowner should negotiate a new schedule for completion with the builder and each party should sign off on it. If quality is a problem, the homeowner may want to bring in an independent inspector to evaluate the work and write down which corrective measures must be taken. If the property does not pass inspection, the building inspector will specify what needs to be done to bring the structure into compliance.

In any event, once quality or delay is an issue, there should be a clear cut agreement about when the contract will be considered breached, and what the remedies will be for the breach of contract. The homeowner should be able to know at which point she can hire someone else, and the builder should ensure that he will be paid for work to date or even the full value of the contract if the homeowner terminates it unlawfully.

Homeowners have two means of securing judgments against builders. They can either prevent progress payments, and/or maintain an amount for retainage until the work is complete (usually when a certificate of occupancy is obtained and punch list items are completed), or file suit and move to attach the builder's property.

Putting a lien on property is more difficult with new construction because if the builder is incorporated you can only obtain a lien on corporate property. Under the Home Improvement Statute, the company's designee is individually liable, but that does not apply to new construction.

When new construction is involved, the approach to a dispute is similar to that of a renovation or addition issue, but the law does not provide as many built-in protections. That is why a good contract is even more important for new construction, and why homeowners should monitor the work.

85 Comments:

At 2:42 AM, Anonymous Anonymous said...

Hey,
I was reading your blog and thought that you may be able to offer some advice. My parents are building an addition and remodeling our home here in Illinois near Chicago. I think they made some mistakes in not make clear specifications on the contract as to deadlines and what not, but now its been 9 months since the work was started, and still we have no home. The contractor had trouble passing plumbing and electric inspections, and actually still hasnt gotten them passed. Our contract did specify that work should be completed 6 months after starting but vaguely states that they are not responsible for damages or delays due to forces outside of the contractors control (cleary passing inspections is in his control) My father made the mistake of paying him for the next phase of work (drywalling and other work) 30,000 about and although up till today he was still for completing the work, we received a very poorly written letter (not signed) with his company's heading asking us (in its broken english) to increase the agreed amount by 30% due to increasing costs of materials over the last 9 months and due to the fact that he was forced to hire new subcontractors to do the work he was unable to complete properly. (because the village would not pass him *he was taken to court by the village and forced to pay some ammount for some violations that he commited at another location, and one of the licenses for an electrician belonged to someone that no longer worked for him so he doesnt get along very well with the village*). We wouldnt have too much a problem firing him if he hadnt already taken our 30 grand. We want to threaten to sue, and take action if necessary, but are hesitant because of the fact that we only want our home, for the price that we agreed upon through contract. please post some advice if you have or its more convenient, email to hka88@yahoo.com, i posted anonymous b.c it was easier
-jon

 
At 1:39 PM, Anonymous Anonymous said...

We have a recently completed a custom home and builder is now suing us for an additional $150,000 in charges that were not authorized and no change orders for. We signed a fixed price contract, managed our allowances and performed 6 change orders throughout process. There was no prior notification of these charges. What is our recourse? They haven't given any validation of these incredible charges, yet want to attach the property now. Though how can they get away w/this with NO Change ORDERS?
What can we do?

 
At 2:58 PM, Anonymous Anonymous said...

I went under Contract for a new construction home. I have the builder my earnest money, and upgrades money. The builder assured me the home would be built by Jan 09, well Nov and Dec roll around thet house has not even been started on. My realtor informs me that the builder decided not to build the house. They stated they didn't have to the time to build one house in the area I live. I was given back all my earnest money and upgrades, but I ended up buying another house and had to pay way more for it then I would have my new construction. Is there anything legally I can do about my situation?

 
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At 7:27 AM, Anonymous Anonymous said...

I LIVE IN MI AND WON A JUDGEMENT AGAINST A BUILER FOR AN ADDITION,i also had his liscense pulled,as he did not pay fines or me. 4 yrs later my old atty sends me a letter stating he cannot find him so it is uncollectible...everyone including me knows where he is and he has ads all over stating he is licensed and he is no longer.
any ideas?
he also stated before that we could not sue "him" as we started we could only sue his fake in. which he dissolved as soon as judgement was entered. We went to the address of his "business" he does not rent or own anything there.I caught him working and turned him in to local court, nothing more was done I had pictures and everything, another weird thing my x atty said before was,that the builder could not pay due to hardships..his atty filed right before the deadline of his judgement,tried to make payments so he could get liscense,i declined.because he would have his license and i would never see my money. I am out 5000 to get 5000
my question is if i could not sue him....and only the defunk inc. then why is he stating he cant be found and why was this person going to pay me before with payments to get license?

 
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A Guide to minimize personal discomfort of moving
Humans are emotional creatures. No matter how strong we portray ourselves to be, we always end up in a puddle of tears, when we are forced to leave behind something or someone who happened to be very close. However, as life would have it, often due to academic or professional commitments we are forced to leave a familiar town, city, country and at times even the continent.

There is nothing wrong about feeling homesick. From Hollywood actors to dare devil sportspeople, everyone at some point of time has suffered from this problem. So next time when you feel like crying when you come across something that reminds you of Mumbai don’t blame yourself for it, instead learn to deal with it.
Here are some tips that shall help you to get ready for a new life in a new city.
Accept All Type of Invitation
Once your movers and packers from Mumbai delivers your goods to your new home, do not shut your door and remain isolated. Instead make an effort to know your neighbors. Accept all kind of invitations that you come across. Join a new club or indulge in a new hobby and soon you shall make new friends. If you have small kids, the support system at their school can be very helpful.
Do Not Visit Your Old Home Too Soon
Homesickness kicks in a few weeks or months after you have settled in your new place. Once the initial business of settling down is over, theadreline high of moving to a new place wears off. That is when things start to get gloomy. Do not give into your desire of visiting your old place too soon. Instead focus on your new home. If you happen to miss your extended family and friends you can ask them to come and spend some time with you.
Stay Busy
Staying busy perhaps is the best medicine for almost all types of emotional problem. Understand the fact that you have to function in your new environment and feeling depressed would only add to your problems. Focus your attention on your work and make use of modern age technology to like Skype to stay connected with your friends. Spend time in cooking your local delicacy, once your packers and movers from Mumbai deliver all the kitchen supplies.
Feeling down is a common symptom after moving to a new space. Give yourself some time and develop a support system. Gradually as your heart settles in the new place, you shall discover that you have created a new home in a new city that once used to be a foreign place.

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