Q: If you enter in to a lump sum contractor with a HUD or RD rider that limits the GC profit to 14%, but are making more.
The lump sum was based on unit price, can you ask for back up such as sub contract for the GC?
A: This is a complicated question and any attorney would need to review the actual contract to give you an accurate answer.
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A:
Under California law, if you have entered into a lump sum contract with a HUD or RD rider limiting the general contractor's (GC) profit to 14%, but suspect they are making more, you have certain rights to review documentation. The lump sum based on unit price should have clear, itemized components, which allows for transparency in billing and cost allocation.
As a party to the contract, you can request backup documentation, such as subcontractor agreements, to ensure compliance with the terms of the contract and the profit cap. This is a reasonable request, especially in scenarios where there's a discrepancy or suspicion of overcharging.
Keep in mind that the GC is obliged to adhere to the contract terms, including the profit cap. If there's evidence of non-compliance, you may have grounds for legal action. It's advisable to review the contract details and, if necessary, seek guidance on the specific procedures and legal recourses available in such situations. Remember, the integrity of the contractual agreement is paramount, and both parties must uphold their end of the bargain.
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