Homebuilder breach

[NeoConIV]

Can anyone in the homebuilding industry or someone more knowledgeable than me point me in the direction of where I should go to remediate our homebuilder taking longer than stated in contract for construction?

If anyone has been in this position before, you know how it's mind numbingly frustrating.

Will other homebuilders takeover? Is legal cousel worth the time and money?

Essentially, we're at the 7 month mark, which is about 2 weeks over at this point. It's ridiculous, I know. Appears about a month to go, minimum. We could stick it out, but we're so fed up with him. Quality has been disappointing as well.

Anyhow, any tips, pointers, suggestions would be GREATLY appreciated. Thanks.

[SequSpur]

Who is your builder?

[NeoConIV]

Hausenfluck Customs

http://hausenfluckcustoms.com/

[SequSpur]

Did you put earnest money down or what? How much are you out if you walk?

[NeoConIV]

I'm normally a whiz at finding this kind of stuff on the internet, but I'm just getting nothing...

[SequSpur]

A friend of mine had this problem with a local builder, he just started going off everyday on management and finally they got tired of him and finished his house, but it was still a few months late.

But...

he is really happy now...

I don't know what you can do, you can either wait or walk.

[2Blonde]

I would take your contract to a real estate attorney. Although I think realistically 6 weeks probably isn't going to mean much in the long run. As far as the quality of work, that's another matter. I would imagine you can withhold final payment from the escrow account if the work isn't done to spec or your satisfaction, depending on what your contract says. Again, you need to meet with a real estate attorney. I am sure they could put you in contact with a good mediator.

[NeoConIV]

We put earnest money down before we did the construction loan contract. Now it is the construction loan contract in force. It only says the builder agrees to finish 180 days after contstruction has begun, which has expired. States he has to notify us if construction will go long, which he kind of sort of has.

[SequSpur]

I would take your contract to a real estate attorney. Although I think realistically 6 weeks probably isn't going to mean much in the long run. As far as the quality of work, that's another matter. I would imagine you can withhold final payment from the escrow account if the work isn't done to spec or your satisfaction, depending on what your contract says. Again, you need to meet with a real estate attorney. I am sure they could put you in contact with a good mediator.


Escrow account? The house isn't even finished yet and he hasn't officially closed, moved in or even drank a beer there.

Dude has 2 options, walk or wait. There are loopholes in those contracts that eliminate the guarantee of finishing within x amount of months.

[NeoConIV]

I kind of wanted to avoid seeing a lawyer, but I know there aren't many options. More than anything it's trying to control our emotions, lol.

I mean, sitting in this dumpy cave apartment with two kids, knowing we should be already be in our 'dream home' weeks ago...man, it's hard to deal with. NOW I know what they mean when they say, "if your marriage can survice building a home, you can survive anything."

[2Blonde]

Escrow account? The house isn't even finished yet and he hasn't officially closed, moved in or even drank a beer there.

Dude has 2 options, walk or wait. There are loopholes in those contracts that eliminate the guarantee of finishing within x amount of months.
Actually he has closed on the constuction loan.

[SequSpur]

Actually he has closed on the constuction loan.

Where does he say that? If you put earnest money down to start construction, you are free to walk away at any time. Whether or not you get that back is between you and the builder.

I don't understand where an escrow account comes into play during build time. Have you ever bought a house?

[2Blonde]

After you close on the construction loan the builder puts the money in escrow and draws on it as it is needed to pay construction costs. Then at the very end when all is said and done and signed off on the final lump sum is done and the real home loan is done. During the constrsuction phase you make escalating payments on the construction loan. We are in the process of working all that stuff out right now. We are going to start building later this year.

[NeoConIV]

Dude has 2 options, walk or wait. There are loopholes in those contracts that eliminate the guarantee of finishing within x amount of months.
Yep.

But when you say walk...just dawned on me...during the construction, the house belongs to the builder. Dangit, I hate being a rook and finding things out the hard way... :pctoss

So technically, there is no way another builder could take it over...it's his. Yep, walk or wait. Well, that was simple. When lost, head to spurstalk.com... :lol Works every time.

[SequSpur]

The builder/developer owns the land and the house until you close on it.

[SequSpur]

After you close on the construction loan the builder puts the money in escrow and draws on it as it is needed to pay construction costs. Then at the very end when all is said and done and signed off on the final lump sum is done and the real home loan is done. During the constrsuction phase you make escalating payments on the construction loan. We are in the process of working all that stuff out right now. We are going to start building later this year.

You don't have to pay shit during construction. If you play your cards right, you can put down earnest money as little as 500 and never pay another dime until its finished. When you close.

Who is your broker? :lol

[NeoConIV]

After you close on the construction loan the builder puts the money in escrow and draws on it as it is needed to pay construction costs. Then at the very end when all is said and done and signed off on the final lump sum is done and the real home loan is done. During the constrsuction phase you make escalating payments on the construction loan. We are in the process of working all that stuff out right now. We are going to start building later this year.
Yeah, this is right.

But isn't it true that another builder would not be able to take over the construction, unless current builder agrees?

And, that's another thing that drives me crazy, the monthly escalating interest payments are a Bi%ch!! This month cleared the 1k mark. That's one whole grand we wouldn't have to worry about if this guy finished on time. And by the looks of it, we still got one more monthly installment to go.

[SequSpur]

Yeah, this is right.

But isn't it true that another builder would not be able to take over the construction, unless current builder agrees?

And, that's another thing that drives me crazy, the monthly escalating interest payments are a Bi%ch!! This month cleared the 1k mark. That's one whole grand we wouldn't have to worry about if this guy finished on time. And by the looks of it, we still got one more monthly installment to go.


Dude, if you're putting money into this house, you are truly getting hosed.

Don't you have a broker or did you do this alone?

[2Blonde]

Where does he say that? If you put earnest money down to start construction, you are free to walk away at any time. Whether or not you get that back is between you and the builder.

I don't understand where an escrow account comes into play during build time. Have you ever bought a house?

In answer to your question, yes I have bought and owned 5 houses and now getting ready to build one.

The financing on building is totally different than straight out buying. And the process of custom building is even more of a pain in the butt. I have been working my rear off for months getting everything in order. I now know more about cabinets, lighting fixtures, plumbing, appliances, etc... than I ever wanted to know.

As far as where he said he has already closed. He didn't say that. I did, because of the process of a construction loan and how you have to close on it before they can fund it. Nobody will fund a loan if it hasn't closed and he stated that they got a construction loan, therefore he must have closed on it. That's all.

[SequSpur]

In answer to your question, yes I have bought and owned 5 houses and now getting ready to build one.

The financing on building is totally different than straight out buying. And the process of custom building is even more of a pain in the butt. I have been working my rear off for months getting everything in order. I now know more about cabinets, lighting fixtures, plumbing, appliances, etc... than I ever wanted to know.

As far as where he said he has already closed. He didn't say that. I did, because of the process of a construction loan and how you have to close on it before they can fund it. Nobody will fund a loan if it hasn't closed and he stated that they got a construction loan, therefore he must have closed on it. That's all.

Negotiate. You shouldn't be paying jack until that house is finished. Make the builder pay the interest.

[NeoConIV]

Negotiate. You shouldn't be paying jack until that house is finished. Make the builder pay the interest.
I wish! No way any builder going to pay interest.

[SequSpur]

I wish! No way any builder going to pay interest.

Do you have a realtor, broker, attorney... anything? or did you do this all by yourself?

[NeoConIV]

The construction contract was Alamo Title, the loan through Stock Building supply (since we didn't have enough assets for the banks to approve, but oh well) and New Homes Solutions will secure the Mortgage....

[2Blonde]

It doesn't matter who you go through. It's still the same process. We are going through the VA and the Texas Veteran's Association and we will still have to pay the same things as Neo Con. We have a great Broker and we love our builder.

[SequSpur]

Sounds like Neocon doesn't have any representation.

[NeoConIV]

I could get a lawyer, just would rather have another builder takeover, or some other alternative. I mean, we've got on this guy and he makes promises and always breaks them....

Anyway, thank yall for the help.

[SequSpur]

Please tell me you have a broker or something?

[FromWayDowntown]

I'd go see a construction law attorney immediately.

I'm trying to think through how you would normally handle a situtation like this one, but I've never seen anything like this. A construction law lawyer or even someone who deals more generally with contract, would be in the best position to given you some advice. It might cost you a couple of hundred dollars to sit down for a couple of hours with a lawyer and get some advice -- it will cost more if you need the attorney to represent you, but it may be that some money spent on that will end up saving you money on the house. Depends on the contracts, but that's where I'd start.

The other possibility would be to approach the lender -- I think the lender has a lien on the property that is greater than any lien the builder has; the lender would likely have an interest in protecting that investment and might assist you in trying to resolve the situation.

[1369]

I've been driving all day (From SA to Florida), so these aren't the most lucid thoughts, but I think you should be able to hold payment as retianage, if you have the completion date in writing, maybe something along the lines of failure to complete on time, check with the lien that the lender has and see if you have some kind of relief on that (if the lender has a lien, maybe you can get some relief on the payments since the lender recognizes the problem?)

[NeoConIV]

I'd go see a construction law attorney immediately.

I'm trying to think through how you would normally handle a situtation like this one, but I've never seen anything like this. A construction law lawyer or even someone who deals more generally with contract, would be in the best position to given you some advice. It might cost you a couple of hundred dollars to sit down for a couple of hours with a lawyer and get some advice -- it will cost more if you need the attorney to represent you, but it may be that some money spent on that will end up saving you money on the house. Depends on the contracts, but that's where I'd start.

The other possibility would be to approach the lender -- I think the lender has a lien on the property that is greater than any lien the builder has; the lender would likely have an interest in protecting that investment and might assist you in trying to resolve the situation.


I've got some phone numbers to so real estate lawyers...

[NeoConIV]

I've been driving all day (From SA to Florida), so these aren't the most lucid thoughts, but I think you should be able to hold payment as retianage, if you have the completion date in writing, maybe something along the lines of failure to complete on time, check with the lien that the lender has and see if you have some kind of relief on that (if the lender has a lien, maybe you can get some relief on the payments since the lender recognizes the problem?)
And checking with the lien company for options...

Thanks everyone, I'll keep yall posted...

and let this serve as notice to those of you considering going the custom home route!! You gotta be sooooo careful.

[NeoConIV]

You Shouldn't have hired the builder based solely on the presence of Dubya stickers on his Tahoe, NeoCon
LOL, he doesn't have a W sticker, but he does have a Kinky Friedman for governor sticker....

But that was midway through the build that I noticed.


I SHOULD have looked for the W sticker.... :lol

[spurster]

A friend of mine had this problem with a local builder, he just started going off everyday on management and finally they got tired of him and finished his house, but it was still a few months late.

I would second this approach for a few weeks, but instead of "going off", just insist on talking and complaining nicely to everyone in authority for long periods of time. They will get it done just to have you off their back. Remember that the speaky wheel gets the grease.

Oh, and keep a record of every time you contacted them and who you talked to and what they said.