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Barrister
Barrister, Lawyer
Category: Real Estate Law
Satisfied Customers: 38212
Experience:  17 years real estate, Realtor. Landlord 26 years
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I have a new build contract to build my home with builder

Customer Question

I have a new build contract to build my home with builder who signed contract . To build a 1666 sq ft house for $235,000 which he agreed to do. His salary was for $27,820.00. Now close to being done after 3 draws on construction loan he is asking for $41,000 including additional monies for his men. He called it cost plus. 15% of cost to build. Will probably finish around $280,000 with his wages. Do I have any recourse?
JA: Because real estate law varies from place to place, can you tell me what state this is in?
Customer: West Virginia
JA: Has any paperwork been filed?
Customer: Not yet
JA: Anything else you want the lawyer to know before I connect you?
Customer: The appraisal is $254,000
Submitted: 1 month ago.
Category: Real Estate Law
Expert:  Barrister replied 1 month ago.

Hello and welcome! My name is ***** ***** I am a licensed attorney and will try my best to help with your situation. There may be a slight delay in my responses as I type out an answer or reply.

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Did you actually sign the contract that said he got 15% of the cost to build as his pay?

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Or was the set amount the $235K?

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What is the reason for the cost overruns?

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Do you have a contingency in your agreement that the house has to appraise for what it costs?

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How much is left on the final draw?

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thanks

Barrister

Customer: replied 1 month ago.
but an estimate he reviewed and agreed on stated $27820 as his salary excluding his men wages
Expert:  Barrister replied 1 month ago.

Ok, so what is the reason the costs went up?

Customer: replied 1 month ago.
He says he forgot to include his salary and Mens wages in cost to build...mind ya we've already paid his Mens wages on three draws and he refused his salary until home is built is what he is saying
Customer: replied 1 month ago.
Right now the price per sq ft will exceed $180
Customer: replied 1 month ago.
We have around $90 left in construction loan account. House is around 90% done
Expert:  Barrister replied 1 month ago.

Ok, then that doesn't make sense because his salary is based on the cost to build, not included in that cost... So if the house cost $200K to build, he gets $30,000 as his salary, taking it to $230,000. He doesn't get to take that $200K add in the $30K and then he gets 15% of that.... that is double dipping.

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With that said, I would stick firm and tell him sorry, but we agreed on a price and if you underbid it, that is not my problem. We agreed on a cost plus 15% and the cost is what the house itself costs, maybe including his worker's costs, but that is it and he gets 15% of that total...

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But if he is asking for an additional $41K over what you agreed, it will be cheaper to fight him in court over that much..

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thanks

Barrister

Customer: replied 1 month ago.
K thx, that's what I figured just curious to see if I had a legitimate case
Expert:  Barrister replied 1 month ago.

You are very welcome. Happy to help any time.

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It was my pleasure to work with you and help with your question. If you ever need me in the future, you can post a new question with "For Barrister" in the caption and the JustAnswer employees will get it to me.

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If you feel I have answered all your questions, I would very much appreciate a 5 star rating by clicking on the rating scale on your screen as that is the only way I receive credit for my work.

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Thanks much

Barrister

Expert:  Barrister replied 1 month ago.

Hello again,

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I just wanted to touch base with you and check in.

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Did you have any further questions I can help with?

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Thanks much

Barrister