Steps to ensure your builder doesn't go bankrupt

Building a new home or renovating an existing one is a major investment, both financially and emotionally. That's why it's important to choose a builder who is reputable and financially sound.

Unfortunately, builders can go bankrupt, just like any other business. If this happens while your project is in progress, you could be left with an unfinished home and a significant financial loss.

There are a few things you can do to help ensure that your builder doesn't go bankrupt:

1. Do your research. Before you sign a contract with any builder, take the time to research their reputation and financial history. Ask around for recommendations from friends, family, and colleagues. You can also check online reviews and government websites for any complaints against the builder.
2. Check their license and insurance. Make sure that the builder is licensed and insured in your state. This will protect you if the builder makes mistakes or goes bankrupt.
3. Get a written contract. Once you've chosen a builder, be sure to get a written contract in place before any work begins. The contract should clearly outline the scope of work, the timeline, and the payment schedule. It should also include a dispute resolution process.
4. Don't pay upfront. Be wary of builders who ask for a large deposit upfront. This could be a sign that they're struggling financially. Instead, agree to a payment schedule that ties payments to the completion of specific milestones.
5. Hold back some money. Once the project is nearing completion, hold back a percentage of the final payment until you're satisfied with the work. This will give you leverage in case there are any problems. An escrow service such as Two-Hold can help with this.

By following these tips, you can help to protect yourself financially and reduce the risk of your builder going bankrupt.

Here are some additional tips:

• Be aware of the signs that your builder may be in financial trouble. This could include things like delays in construction, changes to the contract, or difficulty paying subcontractors.
• If you're concerned, talk to your builder about your concerns. They may be able to reassure you or address any issues that you have.
• Keep good records of all communication and financial transactions with your builder. This will be helpful if you need to make a claim on your DBI policy or take legal action.

If your builder does go bankrupt, don't panic. There are steps you can take to protect yourself and your investment. Contact your insurance provider to make a claim. You may also need to seek legal advice to discuss your options.