If I’m building new home and am paying cash, how much cash should I withhold until build is complete and okay?
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If I’m building new home and am paying cash, how much cash should I withhold until build is complete and okay?
I am paying cash for a modular home being placed on property I own in NC. The completion/move-in date is 4 weeks away. Today, the builder asked for the 4th “draw” of cash. When I pay that amount, all that’s left to pay is approx. $15,000. It is a good idea to only have $15,000 in my back pocket at this point? I live in another state and have not seen any of the construction up to this point. I’m not sure how a cash purchase works on new home builds.
Asked on July 21, 2011 North Carolina
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
Your agreement with the contractor who is installing the modular home for you is on a "progress" basis. Meaning, you pay certain installment amounts to him or her when certain set progress goals are set for its completion in stages. Hopefully the payment completion stages are also set upon building inspection approval at each stage.
If you have not seen the stages of completion for the home being built, you need to ask someone you know where the home is to take photographs of it and email them to you. You should also ask for approvals from the building inspector as to each stage of the progress. Better yet, you should go and actually look at the property in person to make sure construction is going well with no problems.
As to amount to withhold from the contractor, your contract spells out what amountis held back for payment and at what stage. Usually final payment is conditioned upon issuance of a certificate of occupancy by the building department.
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