What if we don't complete our 203k project on time?
You may need an extension of time to complete the project.
Each construction project has an estimated date of completion set by the consultant or the lender and based on the amount of construction and not to exceed 6 months at the onset. Variables exist that include the current schedule of the contractor at the time of the closing. If the contractor is notified the loan closed and they can start working asap, does't mean they have to drop everything and begin your project.
1) What really happens is that the contractor is notified of the closing,
2) The contractor checks their schedule and decides that they have a project completing in a week or two and that crew will be sent to the new project at that time.
3) Materials procurement then takes place, the contractor starts gathering the items they will need to complete you project. While this is going on the contractor will likely set up a meeting with the borrower's to lay out a plan of attack to get this porject completed asap. The contractor makes more money per hour the faster he gets the project completed. Therefore they will be anxious to get started and to get finished.
All this is happening in the background and the borrower doesn't see very much happening and might be getting anxiety about their project. This shouldn't happen as they have been told what is happening behind the scenes.
Once the project begins construction the contractor is under contract to maintain a crew on the job each day thereafter to insure a speedy conclusion to the project. At no time should the contractor cease work on the project for more than thirty days. I wouldn't let them wait more than a week before you call them and find out what is going on. There must be a draw inspection for work completed each thirty days from the close of escrow.
If we look at this logically the first draw is typically is smaller than the future draws as there is less than thirty days of work. If the project is was originally set up to be completed in 4 months and we get to the 3.5 mark you will need to create and execute an extension request. The extension request should include the following:
A) Reason for the delay
B) Time line with a list of items not yet complete and an estimate of when they think each line item may be completed. This time line should be on the contractor's letterhead and signed by both the contractor and borrower.
C) New estimated completion date.
If your project was originally set up for 6 months you could get up to five months additionally in this manner. Some just take a little longer but it is no one's best interest to drag the completion of a project manager Mike Young, 203k Team Leader
We have fourteen offices in CA covering both CA states, NorCAL and SoCAL where we can cover the entire state.
To learn more about the FHA 203k loan program go to www.203kOnLine.com. To contact us for a consultation please go to www.my203kconsultant.com and "order a consultation". If you like what you see here please take a look at Another blog by Mike Young in Spanish and other languages.
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