Sunday, April 27, 2014

The Contractor Hasn't Started Work And We Closed Our 203k Last Week

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How many times to we hear this?

I always tell the client at the consultation that THEY must tell the contractor when the loan closes because they just signed the paperwork. If they fail to do so the pot will boil over a bit and everyone gets upset yet NO ONE has told the contractor it closed escrow.

We always tell the client that they are responsible to let us know when it closes, and we are more than happy to tell the contractor but in all cases the borrower is the boss and the boss should notify the contractor when it is time to start work.

What happens once the contractor learns it has closed escrow?

1) The contractor will set up a meeting with the borrower and lay out a plan to get this project completed,

2) The contractor then buys and gathers materials for the project construction, and

3) Then the contractor will mobilize to get the materials and work force to the job and begin construction

All of this takes about a week. 1st draw is due 30 days from the close. Many borrowers think the contractor should be on the job an hour or so after they have the keys... NOT SO. 

The contractor has 30 days to get their first draw inspection and payment. If they have another project winding down in a week or two, they may very well wait for that crew to mobilize to this new project. It doesn't mean that they won't purchase materials and have that all important meeting with the borrower to make the plan.