Note:  Photo is the Long-Murata Home - Wheeler Construction and


As writer Charles C. Poling explained in “All the Right Intel: Turning Your Dream Home into Your Dream Home” (April 2013, Page 55), building a house is complicated. In addition to being financial stable yourself, you must make sure your builder has the funds and resources to complete his or her end of the deal.

William Prull, president of Santa Fe-based Prull Custom Builders, offers seven tips for checking up on your builder’s financial situation:

•Ask the builder for banking references. Although bankers cannot disclose financial records, they can tell you whether a builder has good business and loan payment history.

•Ask the builder for trade and vendor references, which should give you a feel for how a contractor is evaluated by his or her peers. Check with these suppliers to confirm that the builder’s payment history is solid and that he or she is current on open accounts. Balances older than 30 or 60 days should raise a red flag.

•Ask the builder questions to get a snap shot of his or her financial history: Are you current on your accounts payables? Do you have current workers compensation and general liability insurance policies? (Lapsed policies are a warning sign regardless, but they are also a sign of financial weakness.) Are you busy, and have you been busy? Have you had to lay off people? Have you been forced to close an office and move back to a home office?

•Ask to review copies of proposed contracts in advance. Check to make certain the builder will supply lien waivers every month to ensure that funds are being properly dispersed to the sub-contractors and vendors on the job. Also, small deposits may be OK, but large up-front deposit requests in a contract might be suspect. If the builder provides for retainage from each month’s billing, this withheld amount can be paid upon satisfactory completion of the contract.

•For more official insight, check with the Better Business Bureau, which will have records of complaints by clients, such as billing/collection issues, problems with service or delivery issues. This service, which also rates businesses on a scale of A+ to F, is free and available online.

Dun & Bradstreet, a leading source of commercial information and insight on businesses, can provide a report about your potential builder. These online reports start at $62, for which price you will get you payment history, industry payment benchmarks and credit limit recommendations. The more expensive reports offer information such as the likelihood of business failure or late payments.

•Check with Construction Industry Division, part of the New Mexico Regulation and Licensing Department, to see if complaints or judgments were made against the builder. You’ll need the contractor’s name and license number.

Happy building!