Am I legally responsible for "overages" incurred during construction of my home for which I do not have a change order?

Asked 7 months ago - Statesboro, GA

We built a custom home and closed on it in October 2013. At the time, the general contractor signed the Contractor Affidavit attesting to the fact that he had been paid in full. He had not completed the punch list and so we retained the check for allowance overages until all work was completed. He has just completed the work today. He has come back with a list of "overages" now that he wants to be paid for. He is now charging us for things that he changed during the course of construction that he told us he would not charge for. Our contract states that if there are any cost changes, he had to provide us with a change order with cost change. Since no change orders were ever presented, do we owe for these items?

Additional information

I should add that if he had told us that there would have been added costs associated with the changes that he suggested, we would have said NO! We took his word that these were changes that would be better for the house (he was the "expert") and that they would not cost us anything additional. Contract with him states that he had to provide us with a change order detailing cost increase (or decrease) and be signed by contractor and homeowners. I agree that we owe for our allowance overages but do not feel that we should have to pay for all of these additional items that he is now throwing at us. We also discovered today that he has not been paying all the subs/suppliers even though we have paid him the entire contract amount. It seems he is trying to charge us for "overages" to make up some money that should have already paid to the subs.

Attorney answers (3)

  1. Thomas Richelo

    Contributor Level 14

    4

    Lawyers agree

    Answered . Your situation is, unfortunately, quite common in residential construction. I am handling a case right now where a contractor told an owner of a long list of "extras" that were only identified as such after the work was long done, and even after the contractor filed a lien and lawsuit. An experienced construction attorney will know a number of ways to defend these cases based on what the contract says, what an affidavit or waiver says, and the circumstances of the project.
    A major problem and the source of many of these disputes is that there can be circumstances where the parties, by their conduct, depart from the formal written terms of the agreement and may engage in informal procedures. For example, if there are any instances where you asked for or consented to an extra work item and an extra charge, however small, that may give the contractor a basis to argue that it set the pattern that both parties could depart from the formal change order procedure.
    Your situation is complicated by the claims of subs and suppliers. You have a right to demand that your contractor give you a full accounting of who he has paid and who he owes; then, potentially, you will have to deal with claims asserted by these other persons as well. The best way to avoid such claims is to have a procedure from the start of the project where the contractor identifies his subs and suppliers and shows you evidence they have been paid as a condition to getting his next draw. That way, you manage the money and hang on to what you may need.
    The construction attorney you select will have to get into the specifics in detail with you so keep in mind the size of the problem; a lot matters on how much the GC is asking for and how much emerges in the way of claims by others. Don't make any more payments until you consult with legal counsel. Good luck.

  2. Michael L. Chapman

    Contributor Level 7

    2

    Lawyers agree

    Answered . You should consult with an experienced construction litigation attorney in your area to review your construction contract and discuss the facts in more detail. From what you say, you appear to have a reasonably good chance of prevailing in a contract dispute with your general contractor. Most construction contracts provide for a change order process and if you did not mutually depart from that process then you should be protected from unauthorized change orders. Allowances for items like fixtures and carpet are normally merely estimates and the contract usually makes the owner responsible for the actual cost of allowance items. An unconditional contractor affidavit issued at closing provides important protections for the owner, but adding conditions and exceptions to the affidavit can limit the value of the affidavit. Withholding retainage to pay for incomplete punchlist items can also complicate the legal picture. If there are unpaid subs and suppliers you may end up with mechanics' liens on your property and of course the general contractor may also try to file a lien. You can also file a complaint with the Georgia Board of Residential and General Contractors at the link I have provided.

  3. Kevin M. Veler

    Contributor Level 15

    Answered . You have been given good information so far. Rather than repeat that information, let me make clear, you need to have specific advice from a knowledgeable construction attorney regarding your situation which will require reviewing the actual contract and the other forms as well as the facts. You will need assistance in drafting a response, understanding the risk of legal action to collect that the contractor may file if not paid (and your defenses) and whether a complaint would be appropriate to the state contractor licensing board.

    Disclosure: This answer and any information contained in this answer is not intended to be treated as legal... more

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