Banks Accused of Bias for Builders

Friday,  November 4, 2005

Officially, banks here do not recommend contractors for construction projects for which they loan funds. However, there are residents who are now sleeping on floors instead of in finished homes because of unprofessional contractors, reportedly recommended by banks.0

Cayman Net News asked the head of one bank if that institution recommended contractors alongside disbursing loans and he said, “no not at all.”

The bank head said that the customers do all that. “The customer provides contractors’ quotations and reports from Quantity Surveyors to us. If we were to recommend contractors there may be a perceived conflict of interest,” he added.

The CEO said the bank did not have a list of contractors from which they make recommendations.

However a customer of the bank said that at the time her loan was to be approved, an officer of the bank recommended a contractor.

“I had presented a contractor’s quote and the bank’s officer recommended that I obtain a comparative quote,” she said.

“The contractor to whom the bank’s officer directed me provided a quote that was marginally less. As such, it was suggested that I go with the lower quote. I simply felt that the bank knew what it was doing,” she said.

That contractor has now received almost all the money assigned for the project but the customer said she was unwilling to agree to the bank making any further payment because areas on the house that have already been done are now falling apart.

“Also, the contractor has resigned from the job in the middle of the project in order not to have to fix any of the problems. More importantly, the bank is insisting that I settle with the contractor before moving to another one,” she said.

“If I settle with that contractor for incomplete work, I will not have enough money to finish. I was paying rent elsewhere because I was promised the house for August. It is now November and I cannot afford rent elsewhere anymore. The house is leaking, utilities are not hooked up and I have nowhere to go with my children.”

Cayman Net News spoke with the contractor involved and the contractor confirmed a measure of pre-selection.

“I am not on a list of preferred contractors at the bank,” she said. “But what happened was that I had done some work for someone in that Bank previously, and, based on that, the officer recommended me.”

Moreover when asked by Net News, the contractor was unable to address the problems the customer had concerning the work on the house in question.

In early August, Rudolph Brandt gave an account of his rebuilding nightmare to Net News and he too had been recommended the contractor by his bank.

“This contractor has been in Cayman for forty years and he was the preferred contractor,” he said.

In other instances homeowners that can afford to take the financial hit, finish off with the banks and foot the rest of the bill themselves. But many can’t.

On the face of it, the primary problem is unprofessional contractors for whom the Cayman Contractors Association cannot vouch.

Seth Thomas Bodden spoke to Cayman Net News in his capacity as a long-time contractor in the industry, and not as Vice President of the Cayman Contractors Association (CCA).

“I am not saying the association could demand money from the contractor, but the association could bring professional pressure to bear. However, this would not solve the problem of getting back the money or getting the job complete,” he said.

“Home owners should get references for the contractors with whom they intend to get into business. However, the number of contractors has ballooned over the period since Hurricane Ivan.

“All that is needed for someone to have such a company is to be a Caymanian and, in 20 or so days, their company is approved. The approval is not based on their knowledge of the industry.

“For some fifteen years now, through several successive governments, we have been trying to get a Builder’s Bill prepared that would address the question of credentials and qualifications. As well, we have been looking forward to a Lien Law. This would be effective in addressing how financial fallouts are addressed.

“The only other alternative people have now is to sue but that takes time, time that many don’t have when they have waited long enough to move into their homes.”

Some residents say that the banks have a role to play and should advise that accommodation should be made for cost overruns and consider extending further loans when conditions warrant. Most banks however,  said that loan amounts are only what contractors present to them. Most of the quotations viewed did not include detailed breakdowns of the job.

In early August this year the Leader of Government Business Kurt Tibbetts said: “There is need for regulation to remove the irregularities in the construction industry. I have instructed Planning to draft legislation for a Contractor’s Bill. Shoddy operators have to be eliminated.”

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