Question about a construction loan

diandto

How does the builder benefit by not taking his final draw? Or how will that hurt us? We are in our house - moved in with less than 5 % left to do; paid up for year on insurance and taxes, we pay interest only on loan amount drawn - so how can he hurt us by waiting? He is not a nice man. The house is closed, but once the final draw is taken, we can lock into a rate instead of paying interest only. thanks

Sammy

Possibly he has overpriced and/or undelivered and has already made what he considered his profit ?

If there was money left on the table otherwise and he was credible, I"m sure he would want the money.

Talk to a real estate versed attorney before going much farther.

RippySkippy

Have you talked to your banker and the builder? Most likely you will have a date that your construction loan will expire, get all the details from your banker. Communicate this to the builder that all draws must be made by "X" and follow up any verbal communication you have with the builder with a letter...get everything you can in writing. I don't know what kind of relationship you have with your bank, they may be able to help you put some pressure on him.

By the way what does your contract say? Isn't there a drop dead or completion date? I can't think that you'd sign a contract with out a completion date. Stick to it.

What's hurting is that you're paying interest, and nothing on the principal. You are not generating equity, you're paying rent. Don't let this drag out...YOU have to be proactive and get things finished up...unfortunately you may have found one of this builders character flaws.

diandto

Character? Our builder? They are not the least bit synonymous ( spelling?). We moved from California to a "good old boy" state, and being fools we do not have a drop dead completion date!!! There is a verbal completion date and one that was passed months ago on the contract. We are going to speak to an attorney Friday, we will see. Thanks for your advice
My advice to anyone moving to a different state - check to make sure that there is an agency that oversees the building contractors in the county or state; also, make sure things are inspected - even if it is not required and CHECK out your builder - we got stuck with a really bad compnay - really bad. Don't ask for references because they will only give the satisfied customers as references - check with BBB or some kind of contractor's board.

Sammy

Go for the attorney and leverage your position!

That should make the contractor sit up and take notice.

Just make sure to scrutinize all work from here forward.

AtlanticWBConst.

Maybe he's waiting to take the final in Jan. 2008, so he can claim it on next year's income and keep this year's down? Seen it done...

__________________
- Build Well -

skymaster

Which "good ole boy state" Sounds like Bill Clinton's kinda builder :}

coastal

I'm going to guess you didn't have a Realtor. They pretty much know who to stay away from and can help keep you out of trouble. Did you get the house inspected?

jogr

My guess is that what you think is the "5% work" he has left to do will cost him more than the final draw so he has no incentive. Or the upside is minimal and he is tied up somewhere else with a bigger upside for him.

Good news is that rates don't look to be going up for a while. They might even drift a little lower. But who knows.

Find out what the law and your contract say about how to cut him loose (termination of the contract). Then figure out the costs involved in your options (is it worth it to cut him off now and pay for the rest yourself and whatever you might still be obligated to pay him). If you are prepared to terminate the contract then give him a drop dead date and follow through.