<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by lou:
We built a new home in Michigan and entered into a contract with a Builder. The Builder agreed in the contract to pay interest on our construction loan until notification to us by the Builder of a Certificate of Occupancy. The Certificate of Occupancy was issued 4-7-00. We were never officially (verbally or written) notified of an occupancy date. We moved in 5-15-00 only because we consistently called and went to the office to escalate the process. Never once did they communicate with us directly. The Builder now refuses to pay the interest and we had to pay the bank or risk damaging our credit. Can we take it to Small Claims Court if it is within the State limits? Is our case good enough? The Builder is stating that we knew about the Certificate of Occupancy but that is not the case. Any comments would be greatly appreciated. Thanks!<HR></BLOCKQUOTE>
Read your construction contract carefully. If there is language to the effect that the BUilder pays the interest up until such time as the Builder notifies you verbally or in writing, then it is the Builders' contractual obligation to pay the interest. If the clause in general states Builder liability for payment of interest on the construction loan stops when the Certificate of Occupancy is issued, then the Builder is not responsible. I would advise holding back the amount of the interest payment from the Builders' final payment as you should have held back either retention or money not yet disbursed to close out until all the final punchlist items have been corrected, lien waivers submitted, builder warranty docs, plans and specs, building material warranties ie. roofing, doors/windows, siding, carpet etc. turned over to you together with a list of all contractor/subcontractors/building material suppliers that worked/supplied materal on the house, inspection reports from the project architect and engineer, soils report/compaction/fill inspection reports, standard ( building, electrical, plumbing etc.) and special (continuous load path, hurricane/earthquake protection, foundation, concrete etc.) inspection reports from the Building Dept. etc.
Keep in mind that the issuance of the Certificate of Occupancy may mean substantial completion and in most cases does not indicate final completion. Next time do not depend on your Builder to inform you of everything especially in a time sequence and money situation. You should have been in direct contact with your building inspector to get an update on the issuance of the CO. After all it is your money.
