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Question DetailsAsked on 2/27/2017

Can I cancel a contract with builder for wanting more money than the contract?

Garage burned down. State Farm gave me a check and I sent it to mortgage company. They aren't responding to my request for disbursement. Contractor wants more money for his "TIME". He has bad attitude and accuses me of having the check.

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3 Answers

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Answered 1 year ago by Member Services

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I presume it went to the mortgage company for escrow under a subrogation of benefits clause in your mortgage - to be paid out as the work was done.

The mortgage company not paying out the funds you would have to talk to a manager there about - perhaps you have not used the correct form to request it or it is "being processed" or such - or the terms were payment upon completion and the repairs hve not been completed, for instance.

Or one other thing I have heard of - that instead of going into escrow for rebuilding, it was applied to your mortgage as a payment, either on purpose or by accident. Which can be a REAL mess to unravel, because while it would reduce your mortgage payments (or possibly pay off the house) you would now have no insurance money to pay for the repairs so would have to get a NEW mortgage or home equity loan to pay for that - and of course delays due to that too. I have even heard of one case where the mortgage documents REQUIRED that any such insurance payment be applied to the mortgage rather than the repair - really a sucker contract, but that's some attorneys for you.

Payment would be made based on the contract with the builder, and in accordance with the escrow agreement with the mortgage company.

If he wants more money, unless he submits a change order request with justification which you approve, then he should not get more than the original contract calls for.

Also, before approving any change order, one should file it with the insurance company for a supplemental claim approval - so THEY pay the difference, not you, unless the addition is for upgrade or additional work YOU requested but was not the direct result of the fire damage. Especially if the contract calls for him to be paid whatever the insurance company adjusts the claim for plus your deductible, which is a common thing with insurance claims.

If he refuses or fails to adequately justify WHY he should get more $ (and not just because he under-estimated - would have to be because of a legitimate need for additional work because of unseen and unforseeable damage or such - like if the damage extended into the main house but was not previouosly known to have or unexpected foundation damage or similar cause), then other than getting an attorney on board to negotiate or sue, you could file a claim against his bond to have the bonding company finish the job out with another contractor - retaining the original contract price.

Answered 1 year ago by LCD

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Votes

I see I did not really directly answer the question on cancelling the contract. If you have a signed contract and he refuses to do the work for that amount (and has not started), you can negotiate a cancellation (be sure it is signed and dated and makes clear that your total cost is zero) - and of course that you get any refund of deposit or partial paymnent BEFORE or AS you hand over the signed cancallation.
If no work has been done - calling his bond or suing is not likely to do you any good unless he refuses to cancel - because the normal remedy in those cases would be cancellation of the contract and refund of any monies paid anyway. If some work has been done, then he would be due the fair market value of the work he did satisfactorily do - so would take some negotiation - or calling his bond to have the job completed under the bonding company for the original total contract amount. If you incurred losses (delay costs, temporary housing, etc) costs due to his refusal to honor the ocntract you would have the possibility of claiming those costs against his bond (a long uphill battle to get that) or by suing. Also, if some work has been done that portion should be inspected by building inspector if required so he does not leave you with failing work (may cost an additional inspection fee), and you should get lien releases from him and any subcontractors and from any significant materials suppliers as part of the final settlement.

Answered 1 year ago by LCD




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