Building your own home is a viable alternative in today's real estate market, especially as the inventory of quality homes decreases. There are several benefits to building your own home. First, you can design it to meet your specific lifestyle and family needs. Second, it's new and the required maintenance and repair work is minimal and covered by warranties. Third, in many cases on Guam, people are given land from other family members, which can then be used as equity in place of cash for a construction loan.
The construction process is a complicated one, so understanding some of the basics may go along way to making the experience less stressful for you, the contractor, and your bank.
In selecting the right contractor you should 1) determine his or her experience with respect to the project you are hiring them for; 2) request a list of properties the contractor has completed so you can inspect or visit them; 3) request the contractor to provide you with some referrals; and 4) check with the contractor licensing board to see if the contractor is in good standing and has a current license.
Other issues to be concerned with relates to documentation and insurance. Ensure that the contractor provides a detailed construction contract supported by a cost breakdown and description of materials. This avoids problems midway through the construction process. Make sure that your house plans are complete and stamped by the appropriate government agencies. Make sure the contractor is able to obtain a building permit and that the proposed building or renovation work does not violate zoning laws or building codes.
Make sure the contractor is able to provide a performance and payment bond in an amount no less than the total construction cost of the project. This ensures that your home will be completed in accordance with you plans and budget. In addition, the contractor should provide builders risk insurance during the construction period to insure against losses incurred as the result of weather, theft, or vandalism.
Finally, make sure there is a qualified individual to periodically inspect the work, making sure that the contractor is in compliance with the contract before any incremental disbursements are paid to the contractor. This is usually handled by your bank.
Once your house is completed a Certificate of Occupancy is issued. In addition, there is a mandatory 60-day lien release period allowing all related parties to the contract to file a mechanic's lien for non-payment. Guam law states that the contractor is required to give an 18-month warranty on the house to include all structural issues.
These are a few things to consider when building your home. If you would like more information, please contact our office at (671) 647-7371. Happy Building!