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Roger, Lawyer
Category: Real Estate Law
Satisfied Customers: 30908
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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My wife and I are building a house and we are 25 days from

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My wife and I are building a house and we are 25 days from completion/closing. It was discovered within the past week that the house was not built to the floor plan. The owners suite and closet was supposed to be bumped out two feet to the rear, but was not. Since the house is nearly completed, the builder is stating that they are unable to make the change at this time and want to credit us the amount of the change to the floor plan. We feel that the build should be held more accountable than to just forfeit the money they would have earned if the completed the job properly and were wondering what our options are. We do not want to walk away from the house but we feel that we deserve some compensation for accepting a house other than we signed off on in the purchase agreement. I cannot find anything specific in the purchase agreement concerning what the remedy would be if the builder fails to satisfy all the obligations in the purchase agreement. But there is a clause for Arbitration, where any dispute, controversy or claim shall be settled by binding arbitration by the American Arbitration Association under that entities Construction Industry Arbitration Rules. I know that you have not read the contract, but in situations like this is arbitration usually the only course of action? And would we have grounds to sue to damages (for receiving a home other than we contracted for) beyond the price we were paying for the upgrade? Thanks in advance!

Roger : Hi - my name is XXXXX XXXXX I'm a Real Estate litigation attorney. Thanks for your question. I'll be glad to assist.
Roger : If the contract calls for arbitration to resolve any disputes, then you would have to submit the claim to arbitration. Even if you were to sue in state court, the contractor would simply have to file a motion to compel arbitration and you'd be sent there by the judge.
Roger : As for damages, you would be able to sue for any damages associated with the breach. This could be a claim for the contract sum to be reduced since you didn't get what you contracted for, you could sue for the cost of replacement/repairing the problem, and you could seek any loss of value to the property (overall value) based on the error.
Roger : Arbitration is usually a good thing because it is cheaper and faster.

Thanks Roger, that is that we thought concerning the arbitration. The cost of the "bump out" was $3,900. The builder is offering to remove that cost from the contract, since they did not build the house to the contract. When you say that we could sue for the cost of replacement/repairing the problem, could we potentially sue for the cost of adding the two feet to the house by another contractor after closing? A modification like that would be very costly. And obviously the value of the house is reduced since the house is 80 sq feet smaller.

Roger : Yes, you could sue for the cost to repair the error in order to make the house conform to the contract. And yes, you could hire a new contractor to do this.
Roger : You're not limited to the line item cost in the contract.
Roger : Instead, you are entitled to demand the cost of repair, which would obviously be more than what the original line item is.

That is good to know. We have a meeting with the builder this week to discuss. Knowing that we are entitled to that gives us more confidence in speaking to him, now that we know we have a case for arbitration. Do you know how quick arbitration hearings usually take to get scheduled? If the builder cannot come to agreement with us and we do go to arbitration, should we close that that pending, or should the closing be delayed?

Roger : You can close, but you need to make clear that you dispute this issue and that you will pursue legal remedies regarding it. The best thing would be to meet with a local attorney BEFORE closing and make sure you do everything right before closing.
Roger : As for arbitration, they can move pretty fast - - from start to finish within a 6 month period is normal.

Thank you Roger. That is very helpful.

Roger : No problem. Glad to assist.

One additional question. If we go to arbitration and sue for the cost to repair the error to make the house conform to the contract. Are we then required to make the repairs?

Roger : Please let me know if you need anything further.
Roger : No. You can do whatever you want in the award UNLESS the arbitrator specifically orders this (which would be unusual).

Thank you, XXXXX XXXXX been very helpful! Have a great day.

Roger : You're welcome. Thanks for allowing me to assist.
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