Construction Propiosal

What is the name of your state? Minnesota


My wife and I signed a "proposal" with a builder to construct a house for a said amount. The proposal says we have to put a certain amount down before construction begins (expected to begin in June). The builder said if we gave him $5,000, a small, yet somewhat substantial amount of earnest money (or portion of that downpayment), he would hold our spot and we could give him the rest of the first draw from our construction loan shortly before construction began.

But then last month the builder called to tell us that material costs were skyrocketing and he ordered the lumber/drywall/wallboard, etc. from the lumberyard before prices got out of hand. So now he wants the rest of the first draw "as soon as possible." He is extremely reputable in our area and got our business off of several references who we know well. He is also very pleasant about the whole situation. He hasn’t mentioned raising prices but is interested in when we can get him the rest of the first draw so he can cover the materials he ordered.

And we’re trying to get him that money but we first need to get an abstract and title work completed (lender says minimum of four weeks) which can’t even begin until they survey and legal description is revised (surveyor said 7-10 days but its been four weeks and he’s not close to finished – I don’t think we’re his top priority because he keeps rescheduling crews and workers assigned to our project.). I told the builder we hoped to get him the money by the end of April a week or two ago and he said “yes, I hope so.” But at the rate this process is moving, I think mid-May would be optimistic to get him the money.

The builder hasn’t mentioned raising prices once but do you think he has any right to raise prices since we haven’t delivered the rest of the first draw? The proposal just says that money is a “downpayment.” It doesn’t say it has to be paid by a certain date and he verbally told us that we didn’t have to give it to him right away, just before construction begins. I guess the document we signed says “proposal” but it is a detailed document and just above the signatures it reads “Acceptance of Proposal – The above prices, specifications and conditions are satisfactory and are herby accepted. You are authorized to do the work as specified. Payment will be made as outlined above.” Would he have to offer us a new proposal to raise prices and could he break from the old one? Thanks.

[HomeGuru]

Originally posted by chucker34
What is the name of your state? Minnesota


My wife and I signed a "proposal" with a builder to construct a house for a said amount. The proposal says we have to put a certain amount down before construction begins (expected to begin in June). The builder said if we gave him $5,000, a small, yet somewhat substantial amount of earnest money (or portion of that downpayment), he would hold our spot and we could give him the rest of the first draw from our construction loan shortly before construction began.

But then last month the builder called to tell us that material costs were skyrocketing and he ordered the lumber/drywall/wallboard, etc. from the lumberyard before prices got out of hand. So now he wants the rest of the first draw "as soon as possible." He is extremely reputable in our area and got our business off of several references who we know well. He is also very pleasant about the whole situation. He hasn’t mentioned raising prices but is interested in when we can get him the rest of the first draw so he can cover the materials he ordered.

And we’re trying to get him that money but we first need to get an abstract and title work completed (lender says minimum of four weeks) which can’t even begin until they survey and legal description is revised (surveyor said 7-10 days but its been four weeks and he’s not close to finished – I don’t think we’re his top priority because he keeps rescheduling crews and workers assigned to our project.). I told the builder we hoped to get him the money by the end of April a week or two ago and he said “yes, I hope so.” But at the rate this process is moving, I think mid-May would be optimistic to get him the money.

The builder hasn’t mentioned raising prices once but do you think he has any right to raise prices since we haven’t delivered the rest of the first draw? The proposal just says that money is a “downpayment.” It doesn’t say it has to be paid by a certain date and he verbally told us that we didn’t have to give it to him right away, just before construction begins. I guess the document we signed says “proposal” but it is a detailed document and just above the signatures it reads “Acceptance of Proposal – The above prices, specifications and conditions are satisfactory and are herby accepted. You are authorized to do the work as specified. Payment will be made as outlined above.” Would he have to offer us a new proposal to raise prices and could he break from the old one? Thanks.

**A: you need an attorney to review your contract.

[lwpat]

I do not think that the builder has indicated that he intends to raise your price. What he has done is to go ahead and purchase materials to protect himself. Builders are seeing major increases in materials, especially steel.

You do need to have the contract reviewed by an attorney since he may try to back out if payment is delayed. I always hestitate when someone requests payment pror to starting work. In a situation like this I always suggest a dual check to the builder and supplier with a list of materials and insist that they be delivered to your site rather than picked up by the builder.

For example the builder could go out of business prior to starting and you could be out your down payment. You also need to be sure that he provides you with insurance certificates.

[HomeGuru]

so chuck, any luck?

Yes. Some progress. I finally said enough is enough and called the survey company's headquarters on Thursday letting them know enough is enough and if they couldn't do the job, I'd find someone else who could. Their response: the chief surveyor is driving up to our location from 2 hours away to "help" our project engineer complete things by mid-week. The builder also called and told them their schedule was ridiculous, telling them this was costing me a lot of money by waiting. However, he then told me it wasn't costing anything, which I assume to mean that the price wouldn't raise. I guess I thought more about the fact that he has already purchased the materials with his own dime. So why would he raise material prices?

[HomeGuru]

Originally posted by chucker34
Yes. Some progress. I finally said enough is enough and called the survey company's headquarters on Thursday letting them know enough is enough and if they couldn't do the job, I'd find someone else who could. Their response: the chief surveyor is driving up to our location from 2 hours away to "help" our project engineer complete things by mid-week. The builder also called and told them their schedule was ridiculous, telling them this was costing me a lot of money by waiting. However, he then told me it wasn't costing anything, which I assume to mean that the price wouldn't raise. I guess I thought more about the fact that he has already purchased the materials with his own dime. So why would he raise material prices?

**A: when he tells you let us know.