The homeowners lost this round although it appeared to be a close question on the issue of substantial performance. The home builder was awarded $5,000 in appellate legal fees as permitted by the lien statute. Read the mechanics lien statute [Chapter 572] and the attorney fees section at 572.32 and the case of Schaffer vs Frank Moyer Constr., Inc., 628 N.W.2d 11, 23 (Iowa 2001).
The facts of this case lay bare a common practice of contractors to inflate the price of materials delivered to the job site. This is not a contract term they like to discuss. The buyer believes the contractor is hired to build not to get paid for what the lumber company is being paid. No wonder consumers aren't spending; they believe the system is set up to rip them off.
What this case doesn’t expose is a practice of ordering double or triple the necessary materials that later end up on some other job or in the contractor’s garage. This practice has nothing to do with this contractor or the facts of this case. Another practice, which again has nothing to do with the evidence in this case, includes using the extra materials for warranty work and charging the insurance companies for the materials. Essentially the contractors are charging for materials another homeowner already purchased. Double or triple dipping is all part of the secret business no one wants to talk about.
PRACTICE TIP: Before signing your new home construction contract dissect the cost line by line and item by item. Then, add a clause requiring no markup by the contractor for materials supplied by and delivered to the job site by the lumber company and other material suppliers. Go to the lumber company and ask questions. This way you will avoid double dipping.
FLYNN BUILDERS L.C. v. LANDE
Appeal from the Iowa District Court for Boone County, William C. Ostlund, Judge. Considered by Vogel, P.J., and Mullins and McDonald, JJ. Opinion by Vogel, P.J. (11 pages)
Homeowners appeal the district court's ruling, following a remand from the Iowa Supreme Court, which awarded $16,296.00 to their contactor. OPINION HOLDS: Because we find the district court exceeded its remand jurisdiction in finding the contractor substantially performed the building contract, we strike that portion of the district court's decision. However, we affirm the district court's conclusion that the contractor was excused from substantial performance because of the homeowner's prior breach when the homeowners refused to pay under the contract and that the hidden markup on the building materials did not materially affect the parties' contractual obligations.
Maybe next week we will talk about the Waukee Gun Club and those residential homes creeping up on the shooting range.