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Am I liable for payment to home builder after closing for…

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Am I liable for...

Am I liable for payment to home builder after closing for their underestimating the cost of work? We built a home in KY this year (2017) and took occupancy in June, with the mortgage closing shortly thereafter. Just today (10/27/17) he's telling us that he's received the final invoice from the electrician and it's $4,500 over his estimated amount (that we paid), and is expecting us to pay the $4,500 difference. Are we legally obligated to pay this bill now that we've closed our loan? It seems odd for us to be getting a bill from him now that we've disbursed all funds and closed the loan.

Lawyer's Assistant: Because real estate law varies from place to place, can you tell me what state this is in?

Kentucky

Lawyer's Assistant: Has any paperwork been filed?

You mean with the courts?

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

I don't think soi

Submitted: 7 months ago.Category: Legal
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12/8/2017
Lawyer: Legal Eagle, Lawyer replied 7 months ago
Legal Eagle
Legal Eagle, Lawyer
Category: Legal
Satisfied Customers: 13,377
Experience: Licensed to practice before state and federal court
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Hello! I am a licensed attorney, admitted to practice in state and federal court. I have a nearly 100% satisfaction rating (click here for more info) so all that means is that you can count on me to help today. if the contract is so one-sided that it would be considered unconscionable, then the terms of the agreement are going to be unenforceable. A contractor who does discover problems that would substantially raise the overall price of the work should notify the homeowner and explain the possible budgetary ramifications. If the amount goes too high, and unless you agreed to pay no matter the cost, then this part of the agreement is going to be unenforceable and if he tries to get you to pay, it could be a breach of contract.

A breach of contract just simply means that one party was obligated to perform and they have either have not performed or have said that they will not perform. Typically, the aggrieved party is entitled to be returned to the same position they were in before the breach. There’s a site that I’ve used in the past where you can find a good template for advising of a breach of contract. It's a bit easier (and cheaper) than going through litigation and I have seen it be effective in the past. If this doesn’t work, sadly, the only other option is to either go through an informal mediation or file a lawsuit in your local court. This website is also pretty cool because you can download the forms right after purchasing. Click here to get started.

What other questions did you have for me today that I can help you out with:-)?

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Customer reply replied 7 months ago
A couple of follow up questions and comments. First, this wasn't a problem that was discovered and had to be fixed, not sure if that is relevant. The electrician failed to send a final invoice before our closing on the home, so the builder estimated what that would be, and as noted was off substantially. Then, when the invoice was received and significantly over the amount, asks us to pay. We had an agreement with the builder, but I believe that we're no longer bound to the contract once we closed on the house based on this paragraph.14. Possession of the lot and Residence shall be given on the completion date. At the time of completion, Buyer, if so requested by Builder, shall execute and deliver to Builder an acknowledgment of completion and release in form satisfactory to Builder certifying that the lot and Residence have been accepted by Buyer and are entirely completed in every detail and releasing Builder from any and all claims hereunder. The acceptance of key or deed or entry into possession of the Residence and lot by Buyer is acceptance by Buyer of the Residence and lot and, except for matters covered by the limited warranty, constitutes a complete release and discharge of all obligations and liabilities of Builder with respect to the construction, completion and delivery of the Residence and lot and every part thereof.
Lawyer: Legal Eagle, Lawyer replied 7 months ago

I see what you mean. Okay, thank you for providing that additional information. This section that you provided likely just says that possession is complete, but it doesn't specify issues of payment.

In light of this new information, this to me sounds like a classic case of negligence on the part of the builder if they did not get the electrician's final invoice before possession transferred. Negligence simply means that there was a duty that the other party owed and they breached that duty in some way. What is most important is that it is proven that the defendant breached their duty of care because that is what mostly determines whether there is a cause of action. Basically, the question is, “Did the defendant’s actions fall below the standard of care for a reasonable person in a similar situation?” If the answer to that question is yes, then there is negligence and you are entitled to damages.

This also seems to be an implied covenant of good faith and fair dealing if the electrician waited that long to send such a high bill without updating you or the builder as to this amount. Under the Uniform Commercial Code Section 1-304, every contract comes with implied promises from both parties that they are going to be acting fairly toward one another. The failure of one party to act fairly toward other can result in a breach of contract.

So, the short answer to your question is no, in my legal opinion, you do not have to pay that high bill. You probably should negotiate a reasonable payment, but that would have to be an argument you make. Plus, it sounds like this may be an issue of fraud as well if they intentionally withheld this information in an effort to ensure you get possession.

What other questions did you have for me?

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