Wife and I bought a lot in north Houston over the holidays and we are looking to build a custom home later this year when we move back to Houston from Australia. I met with several builders after buying the lot just to get info, and Partners in Building was definitely the most impressive. Has anyone used them to build a home or worked with their team (if you are a lender)?

Appreciate any feedback. We are in the early stages of the homebuilding process but trying to get as much info as possible. Thanks.

Check the Greater Houston Builders Association

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Withhold 10% retainage for 30 days following the completion of the project. If your builder and lender do not agree to this, find a new builder and lender. This is the law and required in Texas. The builders know this. If they will not agree to follow the law to limit your exposure, get a new builder.

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Good luck with this. In commercial construction 10% retainage is the norm, but your going to have a tough time finding any good builder to agree to this. Yes it is "technically" the law, but there is no statutory penalties if retainage is waived. In most cases lien releases provided to the lender prior to draw funding is normal protocol.

If you happen to find a residential builder that would agree to such terms, I would almost consider that a red flag. Agreeing to those terms reeks of desperation. It might be a new builder that's just trying to get something on the books or a builder who is behind on another house and needs your construction draws to help pay for another.

They're considered to be a good builder.

Don't bother with GHBA ratings. That whole organization is run by the builders, so it's not exactly impartial. I'm pretty sure all you have to do is pay your dues and you're in.

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Lien releases are worth the paper they are written on if you don't get releases from all of the subs/suppliers.

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Those are exactly the liens I'm talking about. For example, before the framer gets his check, he signs a lien release.

Look, protecting yourself from construction liens is not rocket science. It sounds like you may have had a bad experience in the past, but asking for lien releases from a builder (sub/suppliers) is your right. Especially if you are carrying the construction note. Sorry if you had a hard lesson.

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Good luck with this. In commercial construction 10% retainage is the norm, but your going to have a tough time finding any good builder to agree to this. Yes it is "technically" the law, but there is no statutory penalties if retainage is waived. In most cases lien releases provided to the lender prior to draw funding is normal protocol.

If you happen to find a residential builder that would agree to such terms, I would almost consider that a red flag. Agreeing to those terms reeks of desperation.

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I completely disagree. It doesn't reek of desperation, it shows good faith with your clients. If a builder isn't willing to do this, at the very least, I would require they provide Performance and Payment Bonds. The cost will get passed back to you, but it's only about 1%; and it's good insurance. Make sure the bonds are active for at least 90 days after final completion, which coincides with the amount of time vendors and suppliers have to file liens against your property. If you have lien releases, and a claim is subsequently made by someone who was not disclosed, you can file a lien against the Payment bond.

Ramp5 is absolutely correct about lien releases, and I wouldn't fund a penny without etting them for prior payments. Make sure to get final lien waivers before you release final payment. Make every subcontractor fill out a form that lists all their labor (if not direct employees) and material suppliers. Then, make them provide back-up for their draws. If they draw for materials purchased from anyone other than those listed on the form, it's a red flag for you to get a lien release from that supplier before funding subsequent payments.

As Ramp5 said, it's not rocket science, you just have to be dilligent in managing it and be firm in executing it. Just make sure your contract language is clear upfront. I certainly wouldn't sign a builder's contract without legal representation. I'm not saying builders are crooked, but their boilerplates are definitely written with their best interests in mind. I do it...we all do it...it's just the nature of any contract.

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Retainage is much easier than verifying each and every derivative supplier and trying to get a lien release from each of those supply houses. You hire a GC so you do not have to deal with that headache. Withhold 10% retainage from the original contractor for 30 days after the completion, abandonment or termination of the contract and you will not have to worry about or rely upon the lien releases.

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I don't disagree with you, but a good GC is obtaining those releases anyway. It shouldn't be difficult for the customer to get copies. If I'm the property owner, I'm not going to be comfortable with trusting anyone other than myself to verify that my property will be lien-free at closing. Also, withholding retainage for 30 days may not help you because, in Texas, you have 90 days to submit a notice to lien.

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" I completely disagree. It doesn't reek of desperation, it shows good faith with your clients. If a builder isn't willing to do this, at the very least, I would require they provide Performance and Payment Bonds."

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Although your point makes sense with respect to how it should work, that is simply not how a home builder is going to look at the situation. It's a double edged sword. The builder you really want to build your house is not going to take a deal like that. It's not worth the trouble. Like it or not, a builder is assessing a buyer at the same time the buyer is assessing them. If he determines that your a potential problem buyer, he will increase his margin accordingly. If he gets the deal, fine, but if not he will thankfully walk away. If a good builder (one that has on going work and doesn't need your business to stay afloat) accepts these terms, I promise he has built in all of his margin within the first 90% of the construction funds and possibly bumped his overall margin up just for the trouble.

So in other words, its not always a sign of desperation, but you better believe its always a red flag.

I am one of the areas largest builders and have been here for years. The retainage issue is accurate stautory law in TX. However, msot residential builders cannot afford to have 10% whitheld (Commercial almost always havs the 10% retained). Sometimes homeowners mess with the release of those funds and hold it over the builders head. Building is about trust. Check out your builder, reputation and have they had liens filed againstthem previously (check with title co)? Most builders in B-CS have been here for a while and with homebuilding down for last couple of years many of the fly by night have been weeded out. Go by experience, reputation and your ability to communicate. Also if the price is too good to be true, then it probably is and you're asking for it. 95% of BCS builders remaining are reputable. Also, you may wnat to consider builer building home in their name and you buy the home dirctly from them (this generally is not done on larger more $$ homes). Builder's sign affidavit of bills paid at closing and title insurance covers much of any risk. Good time to build home. Materials and labor are both at lows. Won't last like this forever.

PiB is a good builder but I wouldn't remotely consider them custom. The top custom builders in Houston year-in and year-out are groups like Rohe & Wright or recently Frankel Custom Builders.

Any update on builders these days?

crbongos said:

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Good time to build home. Materials and labor are both at lows. Won't last like this forever.

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you weren't kidding!

classof2019 said:

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Any update on builders these days?

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Where are you looking to build?

In chambers county, are you a builder?

ForeverAg said:

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classof2019 said:

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Any update on builders these days?

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Where are you looking to build?

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In chambers county, are you a builder?