A Wisconsin couple was left with an unfinished house after the builder stopped work, but they can't take the company to court because of a clause found in most home builder contracts.
There are two points of view on this standard clause. Some feel it benefits both parties, and is a cost-effective way to solve problems, but in this case the homeowners feel the odds are stacked against them.
Vera and Bill Anderson spent two years designing their dream home. They never thought they would have to finish building it on their own.
The Andersons hired Mastercraft to build their custom home in Bristol. Vera said, "they gave us every assurance they could do this."
But last March Mastercraft stopped work leaving the house unfinished. At issue was a thousand dollars. Mastercraft billed for $109,000. The Anderson's only agreed to $108,000 as a second payment - an amount the couple calculated was due.
Bill told us, "the contract states clearly we only pay for amount of work they've completed."
To date, the Anderson's have paid Mastercraft a total of $134,000. The couple says they've spent another $78,000 on materials and subcontractors to finish the house on their own. And Mastercraft is still trying to collect.
"They want $22,000 which is not valid. They've overcharged drastically," Vera claimed.
Here's a breakdown of some of what Mastercraft says the Andersons owe. More than $500 is due for electrical. The Anderson's paid the subcontractor directly for his work. According to Mastercraft, that doesn't cover its general contracting fee.
There's also a disagreement over the $6,800 for plumbing. Mastercraft still has to pay its subcontractor, but Bill pointed out, "the amount of money they wanted for the plumbing was over and above the work they had done." The Andersons say they paid a different company to do 75 percent of the plumbing work.
Most concerning to the Andersons are the trusses Mastercraft installed on the roof. The Village of Bristol building inspector saw them piled up on the property in a way that violated Wisconsin State Code.
"I'd never seen trusses laid like that before," Randy Kerkman told us. "They weren't flat. Normally when you unload the trusses they're supposed to be on a flat area."
The Andersons shot video of the trusses being installed. Some were bending, others broke. The builder says its policy is not to use damaged trusses, and those were replaced. Several already installed were repaired by an engineer at no cost to the Andersons. The couple decided to take a credit of $1,600 for that, which was not approved by Mastercraft.
The only way to resolve all these issues is already set in stone in the building contract. You can't go to court.
"You sign it, and that's what you're stuck with," Kenosha attorney Tom Camilli said. He's talking about the mediation/arbitration clause in most home builder contracts.
"They're very important to be aware of, because they really do affect your rights."
He represented the Anderson's in mediation. Camilli says the clause is standard, but not in the best interest of homeowners because of who's involved.
"A lot of times they may not be lawyers, they may not be judges, they may not have any legal experience other than being in the construction industry."
The Andersons case wasn't resolved in mediation, and is now headed to arbitration, something they say they can't afford.
Both Mastercraft and the Andersons feel the other party breached the contract. The builder claims in 25 years its gone to mediation once, and says the Anderson build is the only time it has been to arbitration.
Before you sign a contract with a builder, Camilli recommends having a lawyer look it over first so you know what's you're getting into. You have the option to at least negotiate terms in the contract.
In the Anderson's case, they signed a Metropolitan Builder's Association contract. The MBA will oversee the arbitration and tells us it's used the clause for more than 35 years. The MBA says the clause helps both parties come to a resolution.
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