Legal Question in Construction Law in Texas

New Residential Construction Contract

If a new residential construction contract is entered into with a builder on a Cost Plus basis does the person having the home built have any legal rights as it pertains to cost?

More specifically; a bid was given by the builder, in the contract it states that anything over the bid amount will be submitted for approval and must be done in writing. My house is 80% complete and now my builder informs me that there have been cost overruns whereby my final cost will be 12% over the original bid.

What grounds do I have? He suggested we execute the escape clause of the contract and simply quit at this point. I would think that without my signature on costs that went over budget he does not have a right to expect those from me... especially at this late point in the building process.


Asked on 8/13/02, 6:40 pm

1 Answer from Attorneys
Bradford Downs Bradford K. Downs, Jr. Attorney at Law

Re: New Residential Construction Contract

A cost-plus contract requires a complete accounting with invoices of all costs separated into categories of labor and materials. Most of these type of contracts will have a Guaranteed Maximum Cost for the benefit of the owner. In the event that your contract does not contain this, there should have been specific instructions as to what work was to be done. If the contractor performed any extra work without your consent, you should not be required to pay for it. In order to better evaluate your position I would have to review the contract and all supporting documentation.

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Answered on 8/14/02, 10:43 am


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