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Contract Price vs Actual Price

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austin316

Junior Member
What is the name of your state?NC

We are currently building a custom home and have had significant overruns and delays. By the time we finish the construction we will be $150k over the original estimate the building gave us and 11 months into the process. I know of $50k that we have changed along the way but the other $100k has been due to poor budget and managing of cost. I was wondering if I should invest in a laywer before we close to represent us based off the following information in our contract?

Reads as Follows:::::
The Contract Price
The construction costs are estimated in the attached spreadsheet. Every effort has been made to accurately estimate the materials costs (quantity and cost); however due to volatility in material costs and over/under estimations, the final cost of the home may be more or less than the estimated amount. The cost of the home will not exceed 5% of the estimate with the provided allowances and specifications. If the final cost is less than estimated, the savings will be passed on to the Owner.


This means the building will have to eat - $85k of his overages????

Please advise.
 


HappyHusband

Senior Member
austin316 said:
What is the name of your state?NC

We are currently building a custom home and have had significant overruns and delays. By the time we finish the construction we will be $150k over the original estimate the building gave us and 11 months into the process. I know of $50k that we have changed along the way but the other $100k has been due to poor budget and managing of cost. I was wondering if I should invest in a laywer before we close to represent us based off the following information in our contract?

Reads as Follows:::::
The Contract Price
The construction costs are estimated in the attached spreadsheet. Every effort has been made to accurately estimate the materials costs (quantity and cost); however due to volatility in material costs and over/under estimations, the final cost of the home may be more or less than the estimated amount. The cost of the home will not exceed 5% of the estimate with the provided allowances and specifications. If the final cost is less than estimated, the savings will be passed on to the Owner.


This means the building will have to eat - $85k of his overages????

Please advise.
Sounds like the builder will have to eat everything over the 5% over estimate.
But the builder will most likely not voluntarily eat it and walk away without a fight, so you would be wise to invest in the advice from an attorney specializing in construction and contracts.
 

austin316

Junior Member
We got a lawyer - we are suing our builder for

Breach of Contract
Fraud, Misrepresentation, and Negligent Misrepresentation
(Negligence)
(Breach of Fiduciary Duty)


I was wondering if anyone on this forum has ever been involved in a suit before and could explain the process.

This is something I did not want and tried several times to work out with the builder prior to this point.

Any information on the process would be greatly appreciated.
 

John Se

Member
Suing builders

I have been involoved in lawsuits where the builder was sued by a customer. Usually the builder just needs to fight you to a draw to win...see how that Works. Ok but after you spend about 200k on lawyering and about 2 years or so and you "WIN" what makes you think you will get any money??? Usually builders (LLC's jor corps) have no significant assets, just tools of the trade. Now do you think your builder has significant personal assets, lots of luck trying to pierce the corporate veil.

so now on your house, do you think the money is in the house or do you think the builder pocketed the money and bought a yacht, lots of times contracts are structured with certain fixed price items and certain allowance items (things you pick but have a budget target) . So now provide more details as to how you got in so deep (150K you say) and dont hae the reciepts to back it up?

remember, getting a judgement is one thing, COLLECTING a judgement is an entirely different matter.......dont throw good money after bad.
 

austin316

Junior Member
I think we will take our chances and fight but thanks for the encouragment.

I will let you know in two years how things come out.
 

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