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LawTalk
LawTalk, Attorney
Category: Legal
Satisfied Customers: 37355
Experience:  I am a practicing attorney with more than 3 decades of experience in the legal field.
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I am close to finishing a remodel on my home. The contractor

Customer Question

I am close to finishing a remodel on my home. The contractor has gone ~$37K over budget with no surprise problems that would cause the estimates to be this far over budget. It is a cost plus contract with a clause that he cannot go over without written consent from me - which there is none. I have locked in my 30 day interest rate and have 2 weeks to finish. My question is, if I pay the sub contractors and the house passes the city inspection, can I close while still in dispute with the balance of what I owe the contractor?
Submitted: 2 years ago.
Category: Legal
Expert:  LawTalk replied 2 years ago.
Good afternoon,
I'm Doug, and I'm very sorry to hear of your situation. My goal is to provide you with excellent service today.
While there would be no legal reason that you could not close on time, the lender will probably balk at closing with the threat of a mechanics lien in the future. Your payment of the subs won't protect you from the general's right to file a lien. And the payment of the subs before they have filed liens might be a problem for you as well, because your contract is with the general contractor and not the subs. If you accidentally overpay the subs (you don't know what agreement they might have with the General), that would be money lost to you if the general sued for the debt.
In reality as you have not agreed to go over the contract price you should ultimately win if a suit is initiated by one of you, it will ultimate be up to the lender whether they are willing to close on the loan with the lien still a possibility.
You may reply back to me using the Reply link and I will be happy to continue to assist you until I am able to address your concerns, to your satisfaction.
Kindly, remember to rate my service to you. That is how I am credited for assisting you.
I wish you and yours the best in 2015,
Doug