I'm an owner/investor that had two new construction homes built. It was a cost plus contract and the builder ran up the costs, did NOT get change orders completed and then sent invoices. This builder is completely dishonest, he used materials on his own house he was building and left numerous subs unpaid , he even forged signatures of subs when I put both names on check. Builder filed liens for ridiculous amounts and even update the amounts right before closing. I spent another $25,000 just to finish the houses. In any event, we have sold one but I had to bond the liens off. I had to put up $60,000 in money w bonding company. Now second house is getting offers. Their atty filed suit back in NOV to perfect the liens but hasn't been paid by them. What happens from here? There's an arbitration clause. I want to file complaints to the NCLBGC. Will filing a complaint now mess up anything? How long do the funds stay with bond agent? Thanks in advance
There’s a lot to unpack here. First, I’d be concerned that if you haven’t filed anything in response to the lawsuit filed in November, you could already be in default.
Obtaining a surety bond to discharge the liens is a lot like buying car insurance. You pay a premium to shift the risk from you/your asset, to the surety/insurance company. Typically that premium is a percentage (usually less than 5%) of the 1.25 times the claimed amount under the lien. Once you’ve paid for the premium, you don’t get that money back. The surety then takes the risk that it will pay the claims if the lien claimant prevails (and will look to you to make it whole in the event it does). If the bonding company simply agreed to hold your money in escrow, it is possible that you may get your $60,000 back, but typically when that is done, the escrow agent holds the funds until the lawsuits has concluded and either pays some/all of them to contractor if the contractor won, or returns to the funds to the depositor in the event otherwise. I’d need to understand more about the bond company’s role to properly answer your question.
Compelling arbitration (if desired) under the arbitration clause typically must happen very early in the lawsuit or the parties will have waived the right to do so unless they mutually agree otherwise. Filing a complaint with the NCLBGC rarely produces a result that will address your liens/economic issues with the contractor. I would not recommend doing so unless and until you speak with a lawyer who understands all the facts and circumstances and will be advising you regarding your best interest with a full understanding of all moving parts, including court deadlines.