Looking for some help!!!

[ncsoldier]

My wife and I decided to opt for a modular construction for our new home. This was not a small project and we went with what we were led to believe was a reputable builder. After a lot of planning and designing we came up with a plan for a 3000 sf home erected on pilings. This house sits on 30 acres of family land that we own and was meant to be our "forever home".

We have had nothing but nightmares now! It turns out that the builder has been making draws form our construction account and the bank never even bothered to check and see if the work had been done. The county we live in is a small country county and actually issued a CO (unbeknownst to us) with no flooring in the house. The builder used the CO to completely empty our construction loan. I did not discover anything was amiss with our loan until i tried to put a hold on the account until certain repairs had been done.

The quality of craftsmanship on our homewas negligible to say the least. this from a company that claims to be "Master Craftsmen". We have now had to resort to hiring an attorney and the estimates we have received to repair the house are all hovering in the range of $40-50,000.00.

We are now stuck paying on our construction loan and unable to switch to a perm loan without flooring. Many items need to be repaired before we can even think about putting any flooring down though.

Has anyone out there ever had any experience with modular builders or had this type of nightmare situation happen for them? I am also wondering what I can expect form going into arbitration if we choose that route.

My wife and i are at the point where we would rather have the house removed and just go with a stick built house now.

Thanks for any and all opinions!!!

[DeeTee]

All of that is very unfortunate. I think I'd be looking for a lawyer who was aggressive enough to not only go after the builder but also the county officials who issued the CO. It would be intersting to know how much of your construction loan ended up in a public servant's pocket. In any bank deal I've been involved with the bank always had required visits by a loan officer, or other bank appointed person, right before approving release of funds for any contractor invoice. During that visit the person is supposed to compare the work claimed on the invoice to the work in-place to make sure they match. I understand that in some small communities where so and so is well known at the bank the formalities may slip a bit, but in your case it almost seems the bank should be held liable for fiduciary irresponsibility, at the least. Sick the lawyer on them too. As for arbitration, I've never used it but I understand it's a form of compromise, so I guess if you are feeling conciliatory it might be a quicker and less expensive option. Best of luck.

[Don_P]

In NC I'd talk to the dept of insurance in Raleigh. I believe the builders license came through them and they hold some influence on him. They also hold the inspector's ticket. Have your points of discussion ready when you talk to them. Here in VA licensed contractors pay into a fund to cover some of this type of thing, I would ask.

[ncsoldier]

Thanks for the advice. I was pretty shocked to discover that the NC General Contractors Licensing Bureau has nothing to do with enforcing anything but code violations. Not very impressive if you ask me. The insurance claim you make mention of is only good for $35,000.00 and oour damages so far are well into the $50-60,000.00 range.
The home manufacturer has now backed up what they initially claimed and have stated that they will do the work on the interior of the house that they are responsible for.

...get ready for a long legal battle now...

[TnAndy]

Sorry you're in this nightmare. Personally, I'd NEVER let loan proceeds be disbursed directly to a contractor. The loan checks would go to me, and then to the contractor when I was satisfied with the work, or no deal.

[ncsoldier]

Thanks for the advice Andy. This is the first house my wife and I have ever built. It was going to be our dream home and we went with a builder that we knew personally for quite sometime and had built a certain level of trust in. Granted, had I known then what I know now then I would have NEVER let the situation get this way. I know bankers with several years experience in lending who have fallen into this trap. If you were smart enough to know the ins and outs of homelending before you ever got started then my hat is off to you. Regrettably, there is not many spots where you can go to get a tue education on this topic in your spare time (at least none I know of). My wife and I are not dummies (she has a Doctorate Degree and I am in Law Enforcement) but, we made the simple mistake of trusting people who were only too happy to take advantage of us.

I have taped conversations of all meetings (God Bless NC laws regarding this!!!) and I have kept copious notes and pictures. If this goes to court then we will win easily...it just really sucks that it has to go that far for my wife and I to get into our house.

[TnAndy]

Sounds like you've crossed your t's and dotted your i's there...good deal.

I said what I said from having been in the construction biz for 30 years, and seen every kind of flim-flam deal coming and going. Even good contractors sometimes just flat mis-manage their affairs and get in holes they didn't intend to get into.......which is why you always keep 'em on a short leash. Pay when the work is done, not before.....

Heck, I've seen situations where people write a check for 30k for a remodel job UP FRONT and then wonder why the guy took off with their money without doing one lick of work....jeezzzz......

Hope you get your situation resolved.......

[David]

I am also wondering what I can expect form going into arbitration if we choose that route.


Screwed. That's what you can expect to get. Even if it is in the contract, get a good lawyer who will fight this on the negligence front. Negligence will bust the requirement for arbitration, and you can go to real court.

If you don't believe me, go find some people who have been through it. Better yet, find out who the arbitror is. You'll most likely find someone who was/is a builder (or related profession). Not what I would call unbiased.

[barrydalive1]

Sorry you're in this nightmare. Personally, I'd NEVER let loan proceeds be disbursed directly to a contractor. The loan checks would go to me, and then to the contractor when I was satisfied with the work, or no deal.

Exactly, I do the same thing. It's a good idea to not have loan proceeds go directly to contractors.

[Richard A Hetzel]

I advise my clients this way, and have done so for almost 50 years: "If you and the builder are friends, consider having someone else build the house, if you value your friendship".

The worst nightmares I have witnessed have been instances where the builder is a friend or relative of the owners, and the firendships never survive.

I too do not understand how a builder was permitted to draw directly from a construction loan.

[XactimatePro]

I'm terribly sorry for you. Perhaps you can get the local or regional media to do an expose targeting the builder, the inspections department, and the bank. Good luck. I bet you could have done without all of the 'shoulda-coulda' comments.

[joecaption]

What type of repairs are you talking about that need to be done to get the home right?
If it's small things like small sheetrock cracks, that's pretty normal in a new home due to settling of the foundation in the first year or so.
The reason I'm asking is I've worked on many moduler homes and have seen where the normal crew the companys used to come finish the home off got paid by the house and could careless how it worked out in the long run.
EG: crown molding with butt joints, no leveling compound used where the two sections come together so there was lines in the carpet from the seam, cutting flaoting floor to short so the 1/4 round did not cover the end cuts, no flashing on the dormers or where the garage attached to the house, siding was being installed on a really cold day and they were installing it tight, so the first warm day all the laps come undone, decks installed with the ledger just nailed through the siding.
An inspector is only going to be looking as code items, poor trim, painting, sheetrock finishing, leaking wax ring, things like that he or she could care less.
Have you brought this to the attention of the bank? If not I would to make it harder for him to do this to someone else, and if he's working on another home they may hold him back from getting his next draw until he makes yours right.

[Rich]

I hope they have this figured out - the original post is 3 years old.

[Don_P]

It would be nice if the forum software could close threads after 6 months.
I also, either rightly or not, make the assumption that if someone enters by digging up dead threads they are probably up to little good.
I do like being able to go back and search those threads or link back to them, but they should be closed to new posts.

[RTF]

I am in favor of closing them at some point as well. It blows my mind to see advice given to someone years later.

[Chriswa]

It does seem a little silly. I would think moderators would be able to close threads to new posts or cache them somewhere so ppl can still see but not post