Builder requesting money 1 month after closing

[MarcusD]

What is the name of your state? Oklahoma

We built a house "cost-plus" and we signed a contract saying we'd pay for all invoices plus a builder's fee. A couple of days before closing our builder's company sent us an email saying that they'd have all invoices 2 days before closing. They also wrote that they'd build in $10,000 worth of padding into the price and that they'd lower the total cost if there aren't any overages. On the day of closing, we were told (nothing in writing) they would maintain the final cost, but would write us a check for the difference if any of the money is left over. They signed the standard closing documents stating that all subcontractors had been paid in full and there was nothing outstanding.

It is now almost 1 month after closing and we receive notification from the builder's company that additional invoices came in, so the $10,000 of padding weren't sufficient and they went almost $3,000 over (so their final estimate was $13,000 off). They say we are obligated to pay the difference since the house is "cost plus", eventhough they certified on the day of closing that they had received all invoices and everything had been paid or would be paid.

I understand we'll never see the $10,000, but my question is are we obligated to pay for these additional invoices even almost 1 month after closing? We did sign a contract saying we'd pay for all invoices, however they signed a contract stating that all cost had been taken care of. In the grand scheme of things, it isn't a lot of money, but we feel like we got ripped off throughout the entire process and this is a parting shot.

Can they place a lien on our house? If they don't pay their subcontractors, can these subcontractors place a lien on our house?

Thanks for your advice.What is the name of your state?

 

[MtHoodRising]

I feel your pain...

I believe your title insurance should protect you against any potential liens if the builder doesn't pay their subcontractors. You might want to go back and review your contract to see if there is any wording regarding the timing of invoices and payment requirements after closing. I had a similar situation of building a home in 2006 (July closing) and then heard from the title company over four months after closing that there was a supposed "error" or "errors" on the closing documents and that an invoice wasn't included. I requested additional information and never received it. Now, 13 months after closing the builder is stating that he wants us to settle up with the title company or he won't finish repairs as part of the one year warranty contract. I have spoken to an atty who stated that there wasn't really a well defined time limit for a builder or title company to pursue additional funds from the buyer after closing. In my situation, there are a number of gray areas that could play out in our favor it this goes to court. In your case, you really should consult with an atty to have your contract reviewed and to get the appropriate legal direction. $10,000 or $13,000 is a lot of cash! So again, I think that you are protected against any potential liens from subcontractors, but your builder could still take legal steps to pursue payment for the outstanding invoices. Good luck!!

 

[CraigFL]

Also, I would expect that when the final payment is made to the contractor, a release would be signed by him that would protect you from any future claims like this.

 

[HomeGuru]

What is the name of your state? Oklahoma

We built a house "cost-plus" and we signed a contract saying we'd pay for all invoices plus a builder's fee. A couple of days before closing our builder's company sent us an email saying that they'd have all invoices 2 days before closing. They also wrote that they'd build in $10,000 worth of padding into the price and that they'd lower the total cost if there aren't any overages. On the day of closing, we were told (nothing in writing) they would maintain the final cost, but would write us a check for the difference if any of the money is left over. They signed the standard closing documents stating that all subcontractors had been paid in full and there was nothing outstanding.

It is now almost 1 month after closing and we receive notification from the builder's company that additional invoices came in, so the $10,000 of padding weren't sufficient and they went almost $3,000 over (so their final estimate was $13,000 off). They say we are obligated to pay the difference since the house is "cost plus", eventhough they certified on the day of closing that they had received all invoices and everything had been paid or would be paid.

I understand we'll never see the $10,000, but my question is are we obligated to pay for these additional invoices even almost 1 month after closing? We did sign a contract saying we'd pay for all invoices, however they signed a contract stating that all cost had been taken care of. In the grand scheme of things, it isn't a lot of money, but we feel like we got ripped off throughout the entire process and this is a parting shot.

Can they place a lien on our house? If they don't pay their subcontractors, can these subcontractors place a lien on our house?

Thanks for your advice.What is the name of your state?

**A: t he answer is yes, they can put a lien on the property.