Contract Qn On A Renovation Loan - Remodeling - Contractor Talk

Contract Qn On A Renovation Loan

 
Thread Tools Search this Thread Display Modes
Old 12-22-2018, 05:15 PM   #1
Member
 
insighter242's Avatar
 
Trade: Roof
Join Date: May 2018
Posts: 37
Rewards Points: 80

Contract Qn On A Renovation Loan


Sorry if this is not the right place fr this post .

I am a GC with a small crew and am taking up a remodelling contract worth 100k ( rehab ) of a 1920 house

This is a renovation loan and I have no clue abt what terms to include in my contract or what to look for in the clients contract - I just don't want to get ripped off by some weird point in a contract

I know this is too much to ask so any pointer with help or general direction to go
insighter242 is offline  

Warning: The topics covered on this site include activities in which there exists the potential for serious injury or death. ContractorTalk.com DOES NOT guarantee the accuracy or completeness of any information contained on this site. Always use proper safety precaution and reference reliable outside sources before attempting any construction or remodeling task!

   

Advertisement

 

Old 12-22-2018, 06:50 PM   #2
Sean
 
SLSTech's Avatar
 
Trade: Principal / Owner
Join Date: Sep 2008
Location: Naperville, IL
Posts: 5,400
Rewards Points: 110

Re: Contract Qn On A Renovation Loan


if you don't have one, find & consult with a construction lawyer
With that why would you sign a clients contract, they sign yours with a full scope & provisions

Advertisement

__________________
SLS Construction & Building Solutions LLC Our Blog - The HTRC
SLSTech is offline  
The Following User Says Thank You to SLSTech For This Useful Post:
Rio (12-23-2018)
Old 12-22-2018, 07:13 PM   #3
Member
 
insighter242's Avatar
 
Trade: Roof
Join Date: May 2018
Posts: 37
Rewards Points: 80

Re: Contract Qn On A Renovation Loan


There is a contract approved by fannimae - the lender needs the owner and myself to sign these. There is no exception

I did try speaking to few lawyers , but I wish it was that easy . Their answers were not knowledgeable , just the standard boiler plate contracts - I am sure they are legal , but they are not advising me on "real world" clauses to look out for .

And this is not with respect to just this project , but I want to be educated in future as well .
insighter242 is offline  
Sponsored Links
Advertisement
 
Old 12-22-2018, 08:53 PM   #4
Pro
 
rselectric1's Avatar
 
Trade: Licensed Electrical Contractor and Remodeler
Join Date: Sep 2009
Location: Chicago Suburbs
Posts: 11,780
Rewards Points: 870

Re: Contract Qn On A Renovation Loan


Quote:
Originally Posted by insighter242 View Post
Sorry if this is not the right place fr this post .

I am a GC with a small crew and am taking up a remodelling contract worth 100k ( rehab ) of a 1920 house

This is a renovation loan and I have no clue abt what terms to include in my contract or what to look for in the clients contract - I just don't want to get ripped off by some weird point in a contract

I know this is too much to ask so any pointer with help or general direction to go
When you write your contract, just make sure to spell words out and not do it as if it is a text message. Even run a spell check. I've highlighted 3 examples above.

If you have a standard contract, have your lawyer look it through (yeah I know he'll charge you $150) but worth it in the end if something goes sideways.
__________________
220...221...whatever it takes!
rselectric1 is offline  
Old 12-22-2018, 10:06 PM   #5
Member
 
insighter242's Avatar
 
Trade: Roof
Join Date: May 2018
Posts: 37
Rewards Points: 80

Re: Contract Qn On A Renovation Loan


Thnks fr ur great advice and usefl contribution . This really helps the cmmunity

And perhaps re-read - what I said above , I spoke to 3 - one I paid , the others had a free consultation during which I assessed how much they could help me.

Thnks also fr assuming tht I don't want to spnd money and that I didn't pay any mny fr these lawyers

Also - I don't think I ever wrote a "contract " nor any one should , we go with a template and add necessary elements

To summarize - I need to find that good lawyer ( which is not as easy as pay 150 bucks ) - which is in progress .

In the meanwhile I thought I would ask for some pointers on this forum , so in the worst case that I have to go with the boiler plate contract , I could just add these clauses .
insighter242 is offline  
Old 12-22-2018, 11:00 PM   #6
Pro
 
MarkJames's Avatar
 
Trade: Handyman Services
Join Date: Nov 2012
Location: Arlington, VA
Posts: 8,718
Rewards Points: 13,525

Re: Contract Qn On A Renovation Loan


Quote:
Originally Posted by insighter242 View Post
Thnks fr ur great advice and usefl contribution . This really helps the cmmunity

And perhaps re-read - what I said above , I spoke to 3 - one I paid , the others had a free consultation during which I assessed how much they could help me.

Thnks also fr assuming tht I don't want to spnd money and that I didn't pay any mny fr these lawyers

Also - I don't think I ever wrote a "contract " nor any one should , we go with a template and add necessary elements

To summarize - I need to find that good lawyer ( which is not as easy as pay 150 bucks ) - which is in progress .

In the meanwhile I thought I would ask for some pointers on this forum , so in the worst case that I have to go with the boiler plate contract , I could just add these clauses .
Classy.
MarkJames is offline  
Old 12-22-2018, 11:20 PM   #7
Pro
 
Mordekyle's Avatar
 
Join Date: May 2014
Posts: 2,244
Rewards Points: 4,714

Re: Contract Qn On A Renovation Loan


Is it a 203k loan?


Sent from my iPhone using Tapatalk
Mordekyle is online now  
Old 12-22-2018, 11:48 PM   #8
Member
 
insighter242's Avatar
 
Trade: Roof
Join Date: May 2018
Posts: 37
Rewards Points: 80

Re: Contract Qn On A Renovation Loan


Quote:
Originally Posted by Mordekyle View Post
Is it a 203k loan?


Sent from my iPhone using Tapatalk
Hi there - That's right .
insighter242 is offline  
Old 12-23-2018, 09:54 AM   #9
Pro
 
rescraft's Avatar
 
Trade: residential remodeling/construction
Join Date: Nov 2007
Posts: 633
Rewards Points: 1,319

Re: Contract Qn On A Renovation Loan


Were these construction law attorneys, or general counsel attorneys?
rescraft is offline  
Old 12-23-2018, 12:14 PM   #10
Pro
 
Mordekyle's Avatar
 
Join Date: May 2014
Posts: 2,244
Rewards Points: 4,714

Re: Contract Qn On A Renovation Loan


In a 203k loan, the terms are dictated to you.

You submit your estimate, very itemized in regard to prices for labor , materials, subs, etc.

The appraiser determines if the completed project will appraise at the value needed to make the loan.

You get 50% to start.

When you complete the job and it is approved by the homeowner and the appraiser, you get the remainder.

Very little room for change orders.


They like you to break down prices for materials and labor in the event of an unforseen circumstance. So that you donít charge an exorbitant amount for it when you are mid project.





Sent from my iPhone using Tapatalk
Mordekyle is online now  
The Following 2 Users Say Thank You to Mordekyle For This Useful Post:
insighter242 (12-23-2018), Rio (12-23-2018)
Old 12-23-2018, 01:51 PM   #11
Member
 
insighter242's Avatar
 
Trade: Roof
Join Date: May 2018
Posts: 37
Rewards Points: 80

Re: Contract Qn On A Renovation Loan


Quote:
Originally Posted by rescraft View Post
Were these construction law attorneys, or general counsel attorneys?
I started my search with "construction " attorneys . But i found that , most of these are kind of jack of all trades - meaning not so specialised in construction .

I did find one , but they seem to be very high end - like working for million dollar developers , fighting with gov projects and all, But They said its too small for them .

I think I finally found one - who is not super big and who seems to have knowledge/experience in residential construction litigation . I sent them an email , I wish to post them here , but not sure if it violates any forum rules . However once I speak to them , I can vouch for their capabilities better .

By the way this is in Chicago area
insighter242 is offline  
The Following User Says Thank You to insighter242 For This Useful Post:
rescraft (12-24-2018)
Old 12-23-2018, 01:52 PM   #12
Member
 
insighter242's Avatar
 
Trade: Roof
Join Date: May 2018
Posts: 37
Rewards Points: 80

Re: Contract Qn On A Renovation Loan


Quote:
Originally Posted by Mordekyle View Post
In a 203k loan, the terms are dictated to you.

You submit your estimate, very itemized in regard to prices for labor , materials, subs, etc.

The appraiser determines if the completed project will appraise at the value needed to make the loan.

You get 50% to start.

When you complete the job and it is approved by the homeowner and the appraiser, you get the remainder.

Very little room for change orders.


They like you to break down prices for materials and labor in the event of an unforseen circumstance. So that you donít charge an exorbitant amount for it when you are mid project.





Sent from my iPhone using Tapatalk
Thank you so much sir - This is in line with what I spoke with others. I like to be very honest and stick to time lines , but just worried abt all the contractual stuff .
insighter242 is offline  
Old 12-26-2018, 12:44 PM   #13
Registered User
 
Patrick Munsell's Avatar
 
Trade: Carpentry
Join Date: Dec 2018
Location: The great north
Posts: 9
Rewards Points: 20

Re: Contract Qn On A Renovation Loan


I just purchased a house and used a 203K to finish it out, so I'm giving you the info from a customers perspective.
I could have done the work myself, but because I was borrowing, I couldn't be the acting GC. I had to have contracts with each contractor, which they submitted and were their typical contracts they would normally use. (Electrical, plumbing, insulation/sheetrock)
My purchase was a finished 1st floor; 2nd floor, studs, windows/french doors, some electric and sheetrock on ceiling.

The mortgage company I was using had all the forms necessary, for me, the customer, and of course they filled them all out, because there was a boatload.
There was an independant HUD rep who took care of inspection and initiating all draws.
As Mordekyle says, there was an initial draw, but in my case there was a total of (4) draws.
Each draw, the bank held back 10%, which is included in your final draw. So bear that in mind when determining how much you need to pay everyone along the way.

The mortgage company ended up wanting (1) of the (3) contractors to be the acting GC, and to include the (3) contracts into (1), on his own letterhead.

I wanted to do work on the project, which I was allowed, and there was even talk about reducing the mortgage amount depending on what I did and how much, but a reduction never happened, and I didn't push it because I got to have the quality I wanted with what I worked on. (Sheetrocker was terrible, so I did alot of taping, etc)

During the project, the mortgage company sold the loan to another company, but the HUD rep had already put in a draw request, so that took some time for the new company to get things in order and to send out a check. Didn't go over well with the contractors.

The mortgage co did have a contingency account, for change orders, which we did have to use once. The electrician realized toward the end that one leg that was already existing on the 2nd floor had never made it to the panel. So that took some time to correct, and the CO went through pretty easily.

insighter242, I know your question had more to do with contracts and details, but if you can take anything away from this, all the better.
Patrick Munsell is offline  
Old 12-26-2018, 01:07 PM   #14
Member
 
insighter242's Avatar
 
Trade: Roof
Join Date: May 2018
Posts: 37
Rewards Points: 80

Re: Contract Qn On A Renovation Loan


Quote:
Originally Posted by Patrick Munsell View Post
I just purchased a house and used a 203K to finish it out, so I'm giving you the info from a customers perspective.
I could have done the work myself, but because I was borrowing, I couldn't be the acting GC. I had to have contracts with each contractor, which they submitted and were their typical contracts they would normally use. (Electrical, plumbing, insulation/sheetrock)
My purchase was a finished 1st floor; 2nd floor, studs, windows/french doors, some electric and sheetrock on ceiling.

The mortgage company I was using had all the forms necessary, for me, the customer, and of course they filled them all out, because there was a boatload.
There was an independant HUD rep who took care of inspection and initiating all draws.
As Mordekyle says, there was an initial draw, but in my case there was a total of (4) draws.
Each draw, the bank held back 10%, which is included in your final draw. So bear that in mind when determining how much you need to pay everyone along the way.

The mortgage company ended up wanting (1) of the (3) contractors to be the acting GC, and to include the (3) contracts into (1), on his own letterhead.

I wanted to do work on the project, which I was allowed, and there was even talk about reducing the mortgage amount depending on what I did and how much, but a reduction never happened, and I didn't push it because I got to have the quality I wanted with what I worked on. (Sheetrocker was terrible, so I did alot of taping, etc)

During the project, the mortgage company sold the loan to another company, but the HUD rep had already put in a draw request, so that took some time for the new company to get things in order and to send out a check. Didn't go over well with the contractors.

The mortgage co did have a contingency account, for change orders, which we did have to use once. The electrician realized toward the end that one leg that was already existing on the 2nd floor had never made it to the panel. So that took some time to correct, and the CO went through pretty easily.

insighter242, I know your question had more to do with contracts and details, but if you can take anything away from this, all the better.
Thank you Patrick - Great insight . That does help tremendously .
insighter242 is offline  
Old 01-29-2019, 06:53 PM   #15
Registered User
 
Zen life's Avatar
 
Trade: c54 & c6
Join Date: Jan 2019
Location: 1767 E. Colorado Blvd.
Posts: 9
Rewards Points: 18

Re: Contract Qn On A Renovation Loan


Talk to 2-3 lawyers and do your own due diligence on the web such as forums just like this.
__________________
obey the nature of things and you will walk freely and undisturbed - https://www.choicegraniteinc.com
Zen life is offline  
Old 01-29-2019, 10:50 PM   #16
Member
 
insighter242's Avatar
 
Trade: Roof
Join Date: May 2018
Posts: 37
Rewards Points: 80

Re: Contract Qn On A Renovation Loan


Quote:
Originally Posted by Zen life View Post
Talk to 2-3 lawyers and do your own due diligence on the web such as forums just like this.
Thanks much , that seems to be the best option .

Advertisement

insighter242 is offline  


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes Rate This Thread
Rate This Thread:

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Time To Really Consider Escalation Clauses Ed the Roofer Business 26 06-16-2019 03:00 PM
How to get out of a contract Tonygalvan76 Business 7 10-02-2017 08:30 AM
Construction remodeling contract John Myers Construction 6 12-01-2014 11:11 PM
deposit and home owner acted as contractor ksl General Discussion 74 06-01-2012 11:42 PM
terminating contract keoni1978 Business 54 12-04-2010 10:55 PM

Join Now... It's Fast and FREE!

I am a professional contractor
I am a DIY Homeowner
Drywall Talk is for
PROFESSIONAL CONTRACTORS ONLY!

At DrywallTalk.com we cater exlusivly to professional contractors who make their living as a contractor. Knowing that many homeowners and DIYers are looking for a community to call home, we've created www.DIYChatroom.com DIY Chatroom is full of helpful advices and perfect for DIY homeowners.

Redirecing in 10 seconds
No Thanks
terms of service

Already Have an Account?