Builder bankrupt, buying from the bank
Last fall we contracted with a builder to have a custom home built. We paid him 5000.00 down payment. He carried the construction loan and it was to convert over to us at closing. Over the course of time we have put in about 12,000.00 in upgrades. Three weeks ago he notified us that he was going under.
Our construction loan and where we bank are the same bank. He signed the deed back over to the bank and the bank had the title and everything changed immediately. Only one sub had time to put a mechanical lean on the house. I believe it was about 7000.00 for plumbing. According to the bank he has drawn 75% of the loan and only paid out 30,000.00 for our build. Our contract was 282,000.00.
We met with the bank Friday and they are willing to complete the build. They said they have a builder they typically use in these scenerios or if we have one in mind we can use ours. (we don't). The plan is to meet with their builder next week to see if the house can be finished for what is left. I believe he said their was about 65,000.00 left. Any upgrades we want..ie cabinet allowance is 13,000.00 our cabinets are actually 18,000.00 we have to pay the 5000.00 ourself, but that everything we put in, including the other 17,000.00 counts towards the down payment.
The bank is not paying for anything that has been previously finished that doesn't have a lean on it. They are saying this is a financial issues not a moral one and they've already lost 100,000.00 on the deal? How have they lost anything if we end up buying the house?
My next question..is what if there isn't enough to finish it? We still have all the concrete work (garage, driveway, sidewalks, 16x16 patio, two pads outside of side doors) garage door, opener, cabinets, tiling, carpet, lower level floors, lighting, 16x16 screened deck, 12x6 unscreened deck, steps, final paint, final electrical, final plumbing, oh yeah toilets, interior doors, knobs, fireplace mantel, screens, trim work. I am sure I am forgetting things, but hopefully you get the idea.
We of course are very emotionally invested in completing our house. We are their daily and want it. However we want the house we contracted for. My fear is they will say there isn;t enoug money for the deck or crown molding etc.
Does any one have any experience with situatons like this? Any and all advice, perspectives would be appreciated. Thanks in advance. Cathi