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Contractor wants interest on construction loan I was not told about

Santa Ana, CA |

My contractor who built my house is now asking for interest on a loan he got to build the house . I was never told about a loan before hand . He got the loan in his name rather than the LL ( limited liability Company ) he is licensed as . But insists that the loan was for the job . Doesn't the loan have to be in the name of the LL and I read some where that the loan cannot be mingled with other money . At some point I will get a lawyer but I sort of want to know if he in a sense has a strong case for what he is saying .

Attorney Answers 4


  1. No. As I understand it, you hired a contractor to build a home and agreed to pay a price for the construction. His negotiated price could have, had he negotiated it, included sufficient monies to cover the interest on any loans or credit he used to pay for the materials or labor. It did not. His problem.


  2. Under the facts you present, I do not believe the contractor could recover such charges from you. However, the contractor could be entitled to statutory interest of 10% per year for any delinquencies by you in contractual progress payment (as well as other remedies).


  3. The contractor should have a written contract with you as owner. That contract should have a price which would be all what you are responsible for provided he fiulfilled his obligations. If you have no written contract, then your contractor is not complying with the law. You should consulta with an attorney to evaluate all the facts and determine if this contractor is even properly licensed.


  4. No, the loan is his own personal debt and you should not have to share that debt with him. The contract that you signed with the contractor should govern the relationship and obligations between the parties. Read it over to make sure there is no reference to you having to pay interest on his loans for the project.