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For a multi-unit, two or three-year production housing project the builder should consider budgeting a contingency dollar amount for the one-year warranty period between the builder and the homebuyers, for the converted sales models and the empty inventory units that are sold and occupied long past the completion of the construction.
After two or three years, some subcontractors might be out of business and not available for customer service repairs. Some repair items might be due to the wear and tear from the age of the units sitting empty which would not come under the subcontractor’s or manufacturer’s warranty.
The issues of what is warrantied between the builder and the buyer of sales models, and the length of time the subcontractors are responsible for warranty repair work, needs to be addressed contractually for units that may be sold beyond the standard 12-month warranty period at the close of the construction, for example.
Maintenance for the Sales Office
Periodic maintenance, repairs, and repainting of the sales office should be included in the project budget.
On one particular project, the sales office was a separate structure from the sales models assembled out of two double-wide trailers joined together in the middle, which resulted in a 40’-0” x 60’-0” office.
The exterior doors and windows were wood sash with glass panels, and the woodwork was stained a dark mahogany color with a clear lacquer sealer.
After a couple of years, the lacquer finish started to peel off, and the stain on the wood faded. The carpeting showed signs of the constant wear and tear of homebuyer traffic. Several other items needed fixing including the water leaking underneath thresholds when it rained, and doors binding against each other.
The builder in terms of budgeting might look at a temporary sales office as a one-time expense for the initial construction, without considering the repairs and maintenance costs required to keep a sales office looking nice for several years.
The painting or staining of exterior woodwork, the interior painting, the doorknobs, and the carpeting or other flooring might not last the two, three, or four years required to sell-out a large project.
Paint Touchup for the Non-Model Units
I once worked as the jobsite superintendent on a 22-building, 282-unit condominium project, having a sales model building of 12 units, with 5 of the units being furnished and decorated sales models, and the remaining 7 units being empty inventory units.
The 7 non-model units could not be occupied until the end of the project, when the entire sales models and sales office complex was converted into regular production units for sale.
The point here is to point out that the builder needs to budget for the amount of work that is required to bring the non-models, which may have sat empty for a few years while the project was in construction, up to the level of the quality that is standard for the other new units.
On this particular project, the 7 non-models sat empty for three years. The enamel paint on the interior doors and jambs turned yellow in many of the rooms, and the exterior doorknob hardware became badly corroded. The builder had not anticipated the expense of having to repaint large portions of the interiors of all of the 7 non-model units, along with many other minor repairs.
Each project is different. A 250-unit housing tract with 5 sales models will fence off the 5 models and complete the production units for occupancy.
A 100-unit, three-story condominium building that is one long connected structure with an open courtyard, for example, will have a sales office and sales models on the first floor, while the rest of the units in the complex will be occupied as they are sold.
At the completion of these projects no empty non-model units need repair at the time of the conversion of the sales models.
A 12-unit condominium building, for example, containing 5 furnished and decorated sales models and 7 empty non-models, cannot sell and occupy the 7 non-model units because of the conditions surrounding the sales models complex, including trap fencing, sales models signs, and landscaping potted plants in the streets as barriers to control automobile traffic.
The sales models complex for this type of project is thus different from the sales models for other projects in terms of how to handle the empty non-model units.