Foreclosures Badly Impacting On Sub-Contracttors

Posted in Foreclosure Homes, September 3rd, 2008 |

Foreclosures are badly impacting on sub-contractors, as they are not getting their dues because of work being affected in Wasatch Front.

All along the Wasatch Front foreclosures are telling on not only the borrowers and lenders but also on those connected with the construction world – builders and developers, realtors and lending houses. The downsizing of the Utah housing market has also affected the sub-contractors.

Dean Hennefer is one of the many sub-contractors connected with Hennefer Plumbing, Pleasant View. He is in a tight position. He has not been paid for work that he has already completed. Desperate, he has cut down his staff from six to three and using up the reserve he had set aside for future expansion programmes. 49 year old Hennefer explains that most of his type of work consists of verbal assurances and understanding. It is not a big retail company that moves on credit accounts of customers. He keeps his hopes up on the assumption that one fine day he will get paid. It is this very trust that Hennefer and other sub-contractors have placed in builders that is costing him today. It is all a chain reaction of the foreclosure crisis.

Hennefer calculates that he has done work worth $150,000 in new buildings in areas running from Sandy to Box Elder counties. There is not much likelihood that he will get paid because most of the houses here have gone into foreclosure. Legal action holds out a slim hope of getting back a fraction of the amount. But it is not the ultimate remedy. The work has vanished. Moreover it costs money every time one talks to an attorney. He is depending on the lawmakers to turn their attention to their plight.

His suggestion was that the law should be fashioned to give protection to sub-contractors by making them form loan organizations that will tide over matters in the event of foreclosures. When the house sells something should be set aside for the sub-contractors instead of just taking the price that coverers the sanctioned construction loan. Banks should be held more responsible to see where the money goes.

Many feel this will not address the problem. The lenders will never include in the contract any clause relating to the sub-contractors. Fixing the problem has to be market based and cannot be legislative. The sub-contractors have to learn to survive under these market conditions just like countless others.