My jurisdiction is: FL
We entered into a construction contract to build our dream home in 2005. The builder took us to an architect and helped us design the home. He then provided a cost breakdown of how much it would cost to build the home. The bank came back with an approved loan amount of 200,000.00 less than what the builder estimated. The builder then said he would be able to cut costs on the decorative items and provided a new estimate that would keep us on budget.
Our contract states:
Purchase Price, Consideration and Work. Contractor agrees to provide the necessary materials and services to build the Project depicted, described, detailed and specified in accordance with the Contract Documents, as that term is defined in theis Agreement, all of which services and materials are sometimes hereinafter referred to as the "Work." Owner agrees to pay Contractor for the Work and the sum of $200,000.00. This is a fixed fee contract where all of the materials, labor and other related cost of the project will be totaled to determine the total cost of project. In addition to that total will be added the sum of $200,000.00 as the contractor's Overhead and Profit margin. (hereinafter sometimes referred to as the "Purchase Price,") Contractor will be paid in accordance with the draw or payments schedule contained in this Agreement. At this time the cost breakdowns reflect an estimate if $1,600,000.00 as a complete sales price and a contractor's overhead and margin of $200,000.00. These amounts added together equal the 1,800,000.00 sales price. As this is a fixed fee contract, the total sales price may vary sightly depending on cost of materials and labor increases and areas beyond the contractor's control.
In addition the Owner will not be charged for any change order fees from the contractor or any increases in contractor Overhead and Profit Margin.
Contractor acknowledges and agrees that it has reviewed and is familiar with the Contract Documents and the Property and that the Purchase Price and consideration is fair for the Work. In the event that any item of Work provides for an allowance in the Contract Documents and the actual cost to the Contractor is more or less than the allowance, the Purchase Price will be adjusted accordingly. Any such adjustment shall be reflected by a change signed by Owner.
I have never signed any change orders and the builder never informed us of the overages until after they were incurred. These overages all involved the basic structure of the house such as roofing, lumber, trusses, etc. He only gives us a general overage statement after he completes the overages and then requires us to pay for the overages. He is currently about 200,000.00 over budget. We have paid him over $160,000.00 over and above the construction draws from the lender.
We have come in way under budget on the items that we have control over such as picking out flooring, appliances, landscaping, and many decorative items that were budgeted for. The builder has used the bank draws for these kinds of items to pay for all the structural overages.
He now tells us that we have to come up with more money for him to complete the project. According to him the bank draws will not be enough to finish the project. He has stopped work on the house until we can pay him. This has been going on for 4 years now. The original contract said he would complete the project in 16 months. The delays have been a result of him coming to us and asking for more money and refusing to continue work until paid.
Does the builder have any liability in grossly underestimating the cost of building the house? I feel like he lied to us when he refigured the cost of building the home just to get us to sign a contract with him. We have now had to put the house up for sale because it has gone over our budget. If he had completed it in the contracted time, we would have been able to sell it in a healthy market, instead of the depressed housing market that we are currently in. We are out of money and are in danger of losing the house to forclosure if it does not sell.
We entered into a construction contract to build our dream home in 2005. The builder took us to an architect and helped us design the home. He then provided a cost breakdown of how much it would cost to build the home. The bank came back with an approved loan amount of 200,000.00 less than what the builder estimated. The builder then said he would be able to cut costs on the decorative items and provided a new estimate that would keep us on budget.
Our contract states:
Purchase Price, Consideration and Work. Contractor agrees to provide the necessary materials and services to build the Project depicted, described, detailed and specified in accordance with the Contract Documents, as that term is defined in theis Agreement, all of which services and materials are sometimes hereinafter referred to as the "Work." Owner agrees to pay Contractor for the Work and the sum of $200,000.00. This is a fixed fee contract where all of the materials, labor and other related cost of the project will be totaled to determine the total cost of project. In addition to that total will be added the sum of $200,000.00 as the contractor's Overhead and Profit margin. (hereinafter sometimes referred to as the "Purchase Price,") Contractor will be paid in accordance with the draw or payments schedule contained in this Agreement. At this time the cost breakdowns reflect an estimate if $1,600,000.00 as a complete sales price and a contractor's overhead and margin of $200,000.00. These amounts added together equal the 1,800,000.00 sales price. As this is a fixed fee contract, the total sales price may vary sightly depending on cost of materials and labor increases and areas beyond the contractor's control.
In addition the Owner will not be charged for any change order fees from the contractor or any increases in contractor Overhead and Profit Margin.
Contractor acknowledges and agrees that it has reviewed and is familiar with the Contract Documents and the Property and that the Purchase Price and consideration is fair for the Work. In the event that any item of Work provides for an allowance in the Contract Documents and the actual cost to the Contractor is more or less than the allowance, the Purchase Price will be adjusted accordingly. Any such adjustment shall be reflected by a change signed by Owner.
I have never signed any change orders and the builder never informed us of the overages until after they were incurred. These overages all involved the basic structure of the house such as roofing, lumber, trusses, etc. He only gives us a general overage statement after he completes the overages and then requires us to pay for the overages. He is currently about 200,000.00 over budget. We have paid him over $160,000.00 over and above the construction draws from the lender.
We have come in way under budget on the items that we have control over such as picking out flooring, appliances, landscaping, and many decorative items that were budgeted for. The builder has used the bank draws for these kinds of items to pay for all the structural overages.
He now tells us that we have to come up with more money for him to complete the project. According to him the bank draws will not be enough to finish the project. He has stopped work on the house until we can pay him. This has been going on for 4 years now. The original contract said he would complete the project in 16 months. The delays have been a result of him coming to us and asking for more money and refusing to continue work until paid.
Does the builder have any liability in grossly underestimating the cost of building the house? I feel like he lied to us when he refigured the cost of building the home just to get us to sign a contract with him. We have now had to put the house up for sale because it has gone over our budget. If he had completed it in the contracted time, we would have been able to sell it in a healthy market, instead of the depressed housing market that we are currently in. We are out of money and are in danger of losing the house to forclosure if it does not sell.
