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Finding Errant Builder

Ask the Real Estate Lawyer: Real Estate Law Q&A

REM #LAW 665

By Ilyce R. Glink and Samuel J. Tamkin

Summary: The reader has purchased and closed on a new condominium. Not only did the builder not finish the landscaping, the town is now demanding a correction in the grade of the lawn. Ilyce and Sam discuss how to track down the builder and determine if they have any recourse.

Q: Our problem is with the builder of the condominium we purchased last year.
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We were promised a yard that had been laid with sod before we closed and the builder kept giving us one excuse after another to delay the installation.

The town that we live in has demanded that the builder correct the grade elevation on the property surrounding our building. The builder has been notified twice and hasn’t responded to the town. It is now months later and we still do not have a proper landscaped yard.

We have heard that the builder's limited liability company has disbanded and our warranty with the builder is up in two months. What should we do?

A: I suspect that your builder has fallen into hard times and now doesn’t have the money to complete the landscaping for your condominium building.

You may want to investigate a bit to see what’s going on. In this modern age, you can search your State’s registry of companies to determine if your builder’s company has been dissolved.

If it has not been dissolved, the information you heard may not be true. If it has been dissolved, it would indicate that the builder either failed to pay required fees or failed to make required filings to the state agency that administers company documents. In either case, it’s a bad sign.

Frequently, you can search company records on the web site for your State. To find the proper site you can do an internet search for your state’s Secretary of State’s Office or Department of Financial Institutions.

Depending on what you find out, you may wish to contact the building department in the town in which you live. They may have information about your builder and other projects he may be working on right now.

Once construction on a home has ceased, the local town, city, or village municipality will inspect the home and issue a certificate to indicate that the home can be occupied. That’s the certificate of occupancy. In some cases, the certificate is issued without everything being complete, particularly exterior work like sod.

But of more importance to you is that some municipalities require builders to deposit a payment with them to insure that certain improvements, like sod and grading, are properly in place after a municipality has issued a certificate of occupancy.

In exchange for the issuance of the certificate of occupancy early, the municipality holds funds to insure that the final grading and sod are installed at a later time. If the builder does not install it, the municipality won’t release the funds to the builder.

If your local municipality has held back funds, you can try to work with them to release the funds to your condominium association upon completion of the sod and grading.

Finally, you probably have tried many times to contact the builder without success. Unfortunately, the construction industry offers too many examples of situations in which consumers are left holding the bag after a builder closes his or her doors and moves on to another state or opens his or her doors under a new company name.

If you decide to hire an attorney, you will need to find out how much the whole process of grading and sodding the property will cost you and your condo association and what your chances are to recover any money from the builder.

You may find that the cost of hiring an attorney combined with the risk of getting nothing in return after paying for additional expenses may lead to the conclusion that you’re betting off finishing the work yourselves.

If you decide to do it yourself, you should at least file a complaint with the city or state agency that regulates contractors. Some cities require contractors to be licensed and if the local building department has a complaint about a particular contractor or company, it may restrict that individual’s ability to do business in that community.

If you find out that the builder is still doing business in your community and seems to be in good financial shape, you should pursue the builder legally and have him or her honor the commitment to complete the work at your building.

Samuel J. Tamkin is a Chicago-based real estate attorney. Ilyce R. Glink’s latest book is 50 Simple Steps You Can Take To Sell Your Home Faster and For More Money In Any Market. If you have questions for them, write: Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022 or contact them through Ilyce’s website www.thinkglink.com