Consumer Law, Warranties Home building contract billing error 1 year later

[beingpositive]

My wife and I contracted with a licensed home builder to build our home. We signed a contract. We worked thru a lending institution that created an account for us, took over our existing mortgage and converted it to a construction loan. The bank was responsible for paying all the draws to the builder, and confirming al the work was complete. In addition to our contract amount, we had, with the bank, funds available for contingencies, and non-contract fees, such as septic systems, electrical connection to the grid, etc...

During the process, we approved all upgrades, which were also reported to the bank by the builder, and the difference was added to their draw, taken from the contingency account and/or non-contract account, with the bank approving it all.

We did a final accounting with the builders accountant the night before final, received all lien releases from subs, and cut a final remaining balance check to the builder on Feb 28. On Feb 29, we received final. A month later we rolled our construction loan into a 30 year mortgage, through the same bank.

Now, over a year later, the builder says THEY made an accounting error, and we owe $23,000. We do not agree, and cannot find the error they are referring to. We told them to talk to the bank. Then we receive a letter from the builders lawyer, threatening legal action.

Can they do that?

 

[dee_dub]

Can they threaten legal action? Sure, it's a free country.

Can they make a mistake? Sure, everybody's human.

Can they expect to be paid? Ahh, there's the rub.

I'd write the lawyer back and tell him you will not pay unless/until you see evidence of this alleged accounting error and a cogent argument why you should bear any - let alone all - cost associated with it.

 

[beingpositive]

I understand. Thank you.
Being that their accounting is attrocious, they can certainly make it look like I owe the funds. My accounting, however, does not show such error. They constantly mixed up contingency funds with contract items, non-contract funds with contract items and so forth. At one point, the bank released a draw to the builder for $19,000 (flooring allowance) when the floors were not done yet. In fact, we had told the builder and the bank that we were going to finish the floors ourselves.

The follow up question is: if their accounting shows an error, yet ours does not, who's documentation is assumed correct? Or does it matter?

 

[dee_dub]

Assumed by whom? I'm sure you assume yours is correct. I'm sure they assume theirs is correct.

If you mean which one would a court assume is correct, should the matter unfortunately wind up in litigation, the answer is "neither". The court will accept whichever one is more persuasive.

I presume you have some kind of signoff from the builder showing they were paid in full. A court would no doubt be very interested to know why the builder would give such a signoff if it HADN'T been paid in full, and it would probably be incumbent on the builder to show that its current account is correct and that it was in error back in the day. The fact that the builder's records are a dog's breakfast and contradictory does not bode well for it.