This weekend is a Charlotte weekend lots of draws today. I love these draw inspections. What is a draw inspection?
Once your 203k project gets underway and work begins it won't be very long before your contractor wants to be paid. They just need to put a call in to the consultant who will typically perform the draws on the project. That call will initiate a "draw request" (sample click here).Column 3 is all that your contractor will fill out, don't total it, just indicate the items and amounts you want to be paid for in the column and sign page two at the top and the "lien release".
The 203k consultant should then, after having the contractor and borrower sign, go with them and look at these items. The draw request is just that "a request" for payment. In many cases everything will be okay but once in a while a contractor and/or home owner will indicate they want pay for things that aren't yet completed. The consultant will merely draw a line through their number and write in the corrected number.
1) I once had a contractor call me the day after the loan closed escrow to get a draw for the roof structure. Well, when I had made the initial inspection this home had been fire damaged and the roof was some rafters and sky. So I asked the contractor, have you really got that roof on. He assured me that he did and I instructed him "if you don't have the work done you WILL NOT GET PAID... do you understand. He answered "yes" and we made the appointment to complete the draw.
As you probably guessed the work hadn't yet been started. I had him sign the paperwork making the request, reminded him of our conversation and he answered "yes, but I thought if I saw you face to face I could talk you into making an 'advance' so I could get the money to purchase the trusses, sheathing, and shingles." Wow, of course it is impossible. We do too many draws to risk loosing our ability to do draws so the answer will always be "NO it isn't going to happen". I submitted the draw for "zero" funds in order to collect my inspection fee. The contractor in this case was an owner builder. This 203k project was in Oakland CA.
2) I had another one where I was about to leave for a two week vacation cruise. I met at the house with one of my other consultants. We walked through the home and listed the items they wanted in column 3 as we normally did. The contractor wanted 100% for the roof and 100% for a short fence at the rear of the yard. The roof failed to be completed and needed one or two more courses and a ridge cap, and the fence had all the posts in, all the stringers and about half of the slats. Clearly NOT complete either. I noticed some other issues that were partially finished and was able to provide the amount of money in the draw with partially finished items that the contractor didn't even ask for originally. But not 100% on either the roof or the fence. It becomes academic when I say 95% or 98% as long as it isn't 100% it is a judgement call. I signed the paperwork and sent my assistant back to the office to process the draw and get it to the lender.
Now the fun thing happens.. I get off the vacation and back to Oakland when I get a call from my office assistant and she wanted me to do another draw on that same home (duplex) on my way in. She sent the paperwork with the same assistant who met us at the property. What we found blew me away... the roof still wasn't finished and the fencing wasn't yet finished. The contractor met me at the street as I got out of my car. I wasn't too happy as we filled in column 3 for this draw inspection. I finally pointed out to him that these items were still not complete... in fact it appeared exactly like the way I left it two weeks earlier. He agreed. When I had pulled away from the site two weeks earlier the roofer called down to the general contractor and asked "did he pay the whole thing?", when he heard the answer he got mad and threw his arms up in the air... the weight of the hammer and his rage worked against him and he fell off the two-story roof and had to be rushed to the hospital. He was still recovering and the guy working on the fence dropped that work to take the roofer to the hospital.
I merely shrugged my shoulders and told him that is the "WHY" we can't pay for things that aren't complete. I don't how many times I've seen a building inspector sign off something like drywall nailing that isn't quite finished and drive off as the contractor pulls that worker off that project and has them start somewhere else and the rest of the nails never get installed. Please don't ask a 203k consultant to pay for things that aren't done. It is okay to ask for a partial payment for the work that IS completed but don't ask for more than is done as you will be disappointed. It wont' happen.
3) inspecting as many homes as we have over the years we see that "lack of nailing" quite often as evidenced by cracks in the drywall that run in straight lines. In CA we have a a few earthquakes that will cause this imperfections to show up in most cases if you don't nail the drywall properly. I read somewhere that we have about 240 earthquakes per month in our wonderful state but most are tremors and we don't even notice them and they certainly don't do any damage. It is more like a heavy truck or train going by and the ground shakes a little.
That is enough for today.
