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Construction of New home and cannot afford to live in it.

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moonie1

Guest
I started my project with a hand drawn plan and brought it to a few contractors. The one I chose stated he did not need a blue print, and the project would cost $128,000 for a one level with walkout basement, 2100 sq ft. finished home w/attached DBL garage. I was promised a finish date of October 1, 1999. It wasn't finished until the end of January 2000. I had to ask to increase the loan and wasn't able to close until the end of March. The interest rates jumped 1-1/4%, plus the additional finance charges on the construction loan increased the closing costs to $7200. Doesn't he have an obligation to get the house done on time and if not shouldn't he pay for the additional finance charges and closing costs? Since it was due to his delays. He began another project in October when my house was supposed to be finished. My house sat without construction for a month and a half. It was the middle of November before they started wroking on it again. In the middle of September, I asked the contractor to give me a breakdown of the costs incurred so far into the project and supplied him a list of areas. He said don't worry about it, I persisted with no success. I had tried to save on the house and the contractor stated I could do that. I picked up windows and saved $4800, I painted and varnished the woodwork, saving $1800, I cancelled out two rooms, one a sauna and the other a den with french doors. When I asked the contractor to purchase siding from a different lumber yard, which was the exact same product he was going to purchase from this company he gets all his supplies and building material, and I could save $300,he tried to talk me out of it. But I demanded he purchase from the company of my choice for the savings. I picked up my own doors, and hardware and flooring. The contractor never put dormers in which were included in the plan. The contractor claims he did not bid it with dormers. But they were on the plan!!! He said he wouldn't charge me for the additional lumber used to put in an 8' garage door. At the end of January 2000 he gave me a list of the changes (additions and deletions)on the house with the balance owing. I was so shocked, I got sick to my stomach! The house ended up costing $170,000. The house was appraised for $144,000 at the end of February 2000 and that is with the land. I owned the land. This has been the year from hell! I have never seen a purchase order or itemization of the costs. please tell me who I should see. Also, at the closing the payment was $300 more a month than expected. I ahve been told this is how we do things up here. I have never seen anything like this. This was a new area for me to live and was unaware of many differences. Is there anything I can do to recover the loss? I am now looking at surrendering the house to the mortgage company. Because I cannot try to hang onto this nightmare any longer. Unfortunately, I have had health concerns during this project which has only kept me from being as agressive as I should have been. I was concerned about legal fees since this has wiped out my retirement and any savings I had. I am a single parent. This house was built in northern Minnesota.
 


W

Wgoodrich

Guest
It sounds like you had a cost plus contract. No prints and you made changes throughout the project.

The changes makes an open end to the size of the bill. The cost plus also gives the builder an open end size of the bill if you did not have a flat bid.

If you have paid him, held a closing, and signed all the papers with the bank, then you are stuck.

You might want to talk to you banker, and a realtor and try to inform them of your problem, ask for a loan of any losses above sale price that you will still owe. If the bank agrees with providing a loan for your losses on a payment plan you may be able to survive without going bankrupt. Do not ingnore your problem, it can get worse. If you can make a deal with the bank to bail out, you might put the house up for sale, pay off the mortgage with what you get in the sale of the house and make a loan as agreed with the bank for the losses incurred.

You also might want to create a financial flow sheet to see if you can bite the bullet and pay the payments. Can save your credit at least long enough for inflation to obsorb you losses when the value of the house escalates with inflation if you are lucky enough to have inflationary economy.

Don't put a blinds eye to it address your problem. I see no recourse against the builder with what you said and if you paid him. Be hard to argue that you paid him but now want you money back.

Sorry Best I know

Wg
 
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moonie1

Guest
Wgoodrich, Thank you for your quick response. Unfortunately, I would have liked a different reply, since not being able to recover the losses makes it harder to work through. But I will take your advice and look for an alternative plan, seeking legal advice. I shouldn't have closed although I felt a lot of pressure since they let me move in before I got the final bill for the construction, and was in the house for three months before closing. Plus I didn't have another place to live. Tough lesson learned, though. Thanks again for your reply.
 

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