Our home recently received a CofO and our contractor said we are approved and ready to close to convert a building loan to a mortgage. However, we have learned that we will be significantly over our loan for two reasons. On at least three separate occasions, the contractor added amounts to draw requests we had approved before he submitted them to the bank for payment. We had not approved the increased amounts but it does appear they were made to legitimate vendors. Secondly, his son who was our realtor on a previous home sale now says he is owed $10K on the build of our new home. We have no signed agreement to that effect. We feel like we are over a barrel on this one, we need and want to move in. But these are serious issues! What would you suggest?
You need to consult with a lawyer and have your agreement reviewed. The answers to your questions will depend upon what the agreement with the contractor was regarding price and the specific facts pertaining to that agreement.