What to Do When Your Builder Stops Construction: Options for Homebuyers

According to various surveys and reports, between 5% to 15% of homeowners experience significant issues with their builders or contractors, including incomplete projects or misuse of funds. You might be thinking, "But wait, isn't Home Fixerz Construction a general contractor?" Yes, we are. However, we strive to be part of the solution, not the problem. We prioritize taking on only the amount of work we can handle, ensuring that each project receives the quality and excellence it deserves. We believe that overextending ourselves for profit would compromise our standards, something we refuse to do. There are many home builders I personally know who operate with integrity, transparency, and accountability, and we align ourselves with those values.

Building a home is an exciting journey, but it can quickly become stressful if your builder stops work due to non-payment to subcontractors or suppliers. This scenario can leave you feeling uncertain about the future of your home and your investment. Fortunately, there are steps you can take to protect yourself and ensure your home is completed.

Understanding Your Legal Rights

First and foremost, it’s crucial to understand your rights as a homebuyer. If your builder has stopped work, review your construction contract carefully. This document outlines the obligations of both parties, including what happens if the builder fails to fulfill their commitments.

Steps to Protect Your Investment

1. Communicate with the Builder: Start by discussing the situation with your builder. In some cases, the issue may be temporary and resolvable through negotiation. If the builder is facing cash flow issues, you might consider a payment plan that allows the project to continue, possibly by paying subcontractors or suppliers directly.

2. Consult with an Attorney: If the situation isn’t easily resolved, it’s crucial to consult with a real estate or construction attorney. An attorney can review your contract and advise on the best course of action, whether that involves negotiating with the builder, filing a claim, or taking legal action.

3. Hire a New Contractor: If it becomes clear that the builder cannot or will not complete the work, you may need to terminate the contract. After consulting with your attorney, you can hire a new contractor to finish the job. This process will involve assessing the current state of construction and obtaining a new estimate for completion.

4. Consider Acting as Your Own Contractor: If you have the skills and resources, you might consider taking over the project yourself. This would involve hiring and managing subcontractors directly. While this option requires more hands-on involvement, it gives you greater control over the completion of your home.

5. Utilize the Builder’s Bond: Many builders are required to post a performance bond. If your builder defaults on the contract, you can file a claim against this bond. The bond company may then provide funds to complete the project or hire another builder to finish the work.

Ensuring the Completion of Your Home

Once you’ve determined the best course of action, it’s time to focus on completing your home. Here are some strategies to help you move forward:

-  Secure Additional Financing: If additional funds are needed to complete the home, consider approaching your lender for construction financing. Be aware that this may increase your overall loan amount.

-  Resolve Mechanic’s Liens: If subcontractors or suppliers have filed mechanic’s liens due to non-payment, work with your attorney to negotiate a resolution. Clearing these liens is essential to ensuring that you have clear title to the property once construction is finished.

-  Hire a Construction Manager: If managing the project yourself feels overwhelming, consider hiring a construction manager. This professional can oversee the remaining work, coordinate subcontractors, and ensure the project stays on track.

Moving Forward with Confidence

While a builder halting construction can be a major setback, it doesn’t have to mean the end of your dream home. By understanding your rights, seeking the right professional guidance, and taking proactive steps, you can navigate this challenge and ensure that your home is completed to your satisfaction.

Remember, your home is not just an investment—it’s where your life happens. Taking the right steps now can help protect that investment and bring your dream home to life. My very best wishes!