Sacramento Contractors Hammered by 'Retroactive Pricing'

From the Sacramento Business Journal:

Lennar nails contractors with rebate request

It's common for homebuilders to ask for price reductions from their framers, plumbers and roofers during a slump, but a construction trade association says housing giant Lennar Corp. has taken a new tactic that has trade contractors steaming -- lowering prices on work that already has been done.
...
Contractors and suppliers fear reductions on finished work could become a trend as builders slash new-home prices and increase incentives around Sacramento to stay competitive.

Some subcontractors reached by the Business Journal said they've been asked to drop prices for completed work or refund money they've already been paid. One trade contractor said the price changes were made without his consent. Another alleged the new tactic isn't exclusive to Lennar.

"There are other builders in the Sacramento market who are doing this," said the contractor, who spoke on the condition of anonymity from fear of losing business if he revealed his name. "I've been in the business for 25 years, and this is the first time I've ever seen retroactive pricing."
...
He alleged the company rebid his job without his knowledge, forcing him to drop prices 15 percent, and later applied reductions to invoices on work his company had completed, even though he assumed the price reduction would apply only to future work.
...
Don Harmata, an attorney who represents trade contractors, heard of Lennar's policy through his clients. He said it was highly unusual to ask for reductions in work that's already done.
...
[Marc] Chasman [president for Lennar's Northern California/Northern Nevada region] said he's pleased that a majority of the local companies have accepted the price reductions. Asked if he was surprised at the trade contractors' reaction to the policy, he said, "I'm not surprised. There's a disappointment on our side, too, that the market isn't better."
...
Since January 2006, the Sacramento region has lost 2,400 construction-related jobs, about a 3.5 percent decline.