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Seeking information about regulations

Help!

Thread Starter
Freshman Member
Joined
May 1, 2020
Professional Status
General Public
State
North Carolina
I am seeking where the laws/regulations/statutes are found.

In our case, our bank's Construction Specialist, the person that was to watch over our construction process, which included inspection reports and draws. He felt we should have been given a Remodel Contract instead of a New Construction contract. I don't know why the bank gave us this one instead of the Remodel? My guess, is the stages and draw schedule matched our work better? Anyway, he disregarded the schedule and looking at the inspection which basically stated don't give the contractor money. However, the bank continued to give him 100K without ANY due diligence. It was also later found the contractor did not have a building permit. Which the bank was to have on file per contract before giving any funds. Inspection reports document that there was no permit posted on sight. After the bank discovered negligence they tried to hide the fact that there was no permit by having the contractor purchase a new one and telling us they had it on file. However, we got to the County Inspections office before them and have a signed document from them that as of that date there was none.

The bank then wanted to do another stage inspection, but none of the work was done with a permit and a majority of the work won't meet the local building code. I made sure the inspector knew this when he arrived and he was visibly angry. This report the bank will not let us see. When we called the inspection company to get a copy they say it doesn't exist. Then the bank wanted to do a "Scope Inspection" instead along with a newly purchased permit. We told them we don't think this is legal since none of the work was done with a permit. Also, I came across something somewhere that says when there are legal issues banks can't continue to keep getting inspection until they get one they like. But, I can't find this information now??? Much of the work will have to be redone because it was not done up to code. This Scope Inspection does show that an inspection was done "11 days prior." We don't believe this inspection is legal but where do I find these types of regulations?

ANY help is great! [email protected]
Margaret
 

Russ Kitzberger

Member
Gold Supporting Member
Joined
Jul 3, 2007
Professional Status
Certified General Appraiser
State
Ohio
I work on these sorts of cases in my residential litigation practice area. What you are seeking is legal-related more than appraisal-related.

You likely need a legal team that would include a banking regulation attorney and construction claims litigation attorney. They may also bring in an investment practice attorney to look at if the lender or anyone else had a fiduciary duty to protect your interests.

If they established under statutory law or common law you may have a claim; the legal team would bring in an engineering expert on the construction claim and subpoena the documents from the lender and builder. Normally I would receive the discovery documents, engineer's findings, and discuss them with the legal team and engineering team. From there we would setup an engagement to determine what damages are compensable under statute and common law and opine the amount of compensation you are entitled to.

In summary, I suggest you locate a mid-sized or larger law firm that has both a construction law practice and a lending or banking regulatory practice. That way you can cover both the areas of expertise you need to determine the feasibility of your case.
 

Sadie

Member
Joined
Mar 20, 2008
Professional Status
Certified Residential Appraiser
State
Oregon
Some municipalities will let projects have permits issued after the fact with a penalty payment included. Here its called a cured permit. Inspection by the permitting agency is needed and that can require opening up walls, etc.to ensure work is done to code. Not having permits is not necessarily a death knell to a project. I would definitely check with whoever issued the permits to see what has been approved and what still needs correction. If the permitting agency has approved the project and the work has passed its inspections, then the staged inspections are only to issue draws to the contractor for payment of work completed as of the date of the inspection. Its incredibly surprising the bank did not require permits before approving a loan and issuing funds. Since the permits have been issued, it would seem the project is being brought up to code. I have concerns that the work wasn't to code. Eventually, the project will be completed and to code, but how confident will you be with a contractor who did not know current code?

Inspection are not legal or illegal, the just are.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
You have a legal problem and you need a lawyer. An appraiser isn't going to help.
 
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