How to Vet a Modular Builder Before You Pay a Deposit

There is a specific kind of phone call we hear at PERCH about once a week. A buyer wired $35,000 to a builder they found on Instagram, the build was supposed to start in March, it's now September, the builder stopped answering email three weeks ago, and the buyer is asking us if there is anything they can do. The honest answer is usually some version of not much, and the next person you should call is a lawyer.

This guide is the one we wish those buyers had read first. It is a working checklist — fifteen questions and the answers you should be looking for — that you can take into a builder conversation before any money moves. None of these questions are hostile. A real builder will answer all of them in a single email and probably appreciate that you asked. A builder who dodges three or more of them is telling you something you should listen to.

PERCH is a marketplace, not a builder. We vet the operators we list so that buyers don't have to do this work cold. But plenty of buyers find a builder somewhere else, and the vetting still has to happen. This is how to do it.

1. What Is Your State Modular Program License Number?

Every state that permits factory-built housing maintains a registry of approved modular manufacturers. A real modular builder will have a state insignia program number, a third-party inspection agency on file, and a public listing on the state's manufactured or industrialized housing division website. Ask for the number. Call the state office and confirm it is active. This single phone call ends most of the bad deals before they start.

If the builder says "we don't really need that, we build to a higher standard than code," you are talking to someone who builds sheds and calls them homes. Walk away.

2. Is the Factory You Build In Available for a Tour?

A real modular builder operates a real factory. It has a parking lot, a shipping yard, employees with safety vests, a quality control line, and modules in various stages of build. You should be able to drive there or arrange a video walk-through. If you ask for a factory tour and the answer is we're not doing tours right now with no clear timeline, that is a signal. Ask when tours will resume. Ask for video. Ask for the name of the QC manager.

Companies like Plant Prefab, Method Homes, Dvele, and the larger HUD-code builders like Clayton, Cavco, and Champion all operate real facilities you can verify exist. Their factories are on Google Maps. The ones that don't show up on Google Maps are usually the ones that don't show up when your deposit clears either.

3. Where Does the Deposit Money Actually Sit?

The right answer is a third-party escrow account, a construction lender's draw schedule, or a bonded builder trust account. The wrong answer is a personal bank wire, a Zelle transfer to an LLC checking account, or a "we hold all customer deposits in our operating account." If your deposit is in the builder's operating account and the builder has a slow month, your deposit pays payroll. When the build doesn't happen, the money is already gone.

Ask the question directly. Ask for the escrow agent's name and number. Call them.

4. What Is Your Better Business Bureau Rating and How Many Closed Complaints Do You Have?

The Better Business Bureau is not a perfect tool, but it is a fast one. Look up the builder. Read every complaint. Pay attention to the pattern in the responses. A builder with twenty complaints that all got resolved is in better shape than a builder with two complaints that were ignored. A builder with no BBB profile at all under a company name that's been operating for five years is hiding from something.

5. Are There Any Active Lawsuits Against the Company?

Court records are public. Go to your state's court records portal and the court records portal of whatever state the builder is headquartered in. Search the company name and the principal's name. You're looking for breach of contract suits, mechanic's lien actions, consumer fraud claims, and bankruptcy filings. One lawsuit is a fact of business. Five lawsuits in two years is a pattern.

If the builder has filed bankruptcy in the last five years and is operating under a renamed LLC, that is a flag worth a phone call to a contractor's licensing attorney before you sign anything.

6. What Is the Payment Milestone Structure?

The right structure ties money to verifiable progress. A reasonable schedule looks something like 10% at contract, 25% at engineering and permit drawings complete, 25% at factory start, 25% at factory completion and ready to ship, 15% at site delivery and set, and a final 5% at certificate of occupancy. Each milestone has a deliverable you can verify. Nobody is sending the last 5% before the building department signs the final.

If the builder asks for 50% up front and the rest at delivery, you are financing their cash flow and accepting all the risk.

7. What Does the Warranty Actually Cover and Who Enforces It?

Read the warranty document before you sign the contract. Look for two things. First, what is covered — structural defects, mechanical systems, finish work, appliances. Second, who you call when something fails. If the warranty is enforceable against the builder and the builder dissolves the LLC, the warranty is worth nothing. Look for a structural warranty backed by a third-party warranty company, the way most production homebuilders carry 2-10 Home Buyers Warranty or equivalent.

NAHB maintains good guidance on what a real new-construction warranty looks like. Compare what you're being offered against that standard.

8. What's the All-In Cost Including Site Work and Why Are You Confident in That Number?

The contract price is not the project price. The contract price is the home. The project price is the home plus the site survey, foundation, utility trenching, sewer or septic, water hookup, electrical service drop, permits, impact fees, driveway, landscape, and set crew. A builder who quotes you a contract price and won't engage with site work is leaving you a $40,000–$120,000 surprise depending on your lot.

Ask the builder to give you a written estimated total project cost based on your specific lot. If they refuse, get a separate quote from a local general contractor for the site work before you sign.

9. Can I Get Three References from Buyers Whose Builds You Completed in the Last Twelve Months?

Recent, completed, callable references. Not testimonials on a website. Not a renderings gallery. Actual phone numbers of actual humans whose homes are standing today. Call all three. Ask each one the same three questions: did the build finish on the timeline you were quoted, did the final cost match the contract cost, and would you buy from this builder again. Listen carefully to the pauses.

10. Can I See Photos and Video of Recently Shipped Modules from the Factory Floor?

Real builders have a phone full of factory photos. Trusses going up, electrical rough-in, drywall, finished modules wrapped for shipping. Ask for time-stamped photos from the last sixty days. Ask which project they belong to. Cross-reference against the references above. A builder who can show you the actual module that will become your home, mid-build, is a builder who is actually building.

11. What's the Realistic Timeline and What Triggers the Clock?

A good builder commits to a timeline that starts when something specific happens. "Twelve weeks from permit issuance" is a real timeline. "About four months from when we get started" is a marketing brochure. Get the timeline in writing. Get the trigger event in writing. Get the consequence of a missed timeline in writing — usually a daily liquidated damages number that compensates you for housing while you wait.

12. What Happens to My Deposit and My Build If the Company Goes Under?

Ask this question out loud. Watch how the builder responds. The right answer involves escrow, performance bonds, or a third-party warranty that survives the company. The wrong answer is uncomfortable silence followed by that's not going to happen, we've been in business for twelve years. Companies that have been in business for twelve years still go under. The question is whether your deposit is protected when they do.

FHA Title I manufactured home loans require certain dealer bonding standards specifically because this failure mode is so common in the category.

13. Will You Provide a Notarized Lien Waiver from Each Subcontractor at Each Draw?

Mechanic's liens are the way subcontractors get paid when the general contractor doesn't pay them. If your builder pays the framing crew with your deposit and then the electrician doesn't get paid out of the next draw, the electrician can put a lien on your house. To prevent this, demand a notarized lien waiver from every subcontractor at every payment milestone. A real builder does this routinely. A builder who doesn't know what you're talking about is a builder you should not be writing checks to.

14. What's Your Cancellation and Refund Policy?

Read this in the contract before you sign. Most builders keep some portion of the deposit if you cancel after a certain point in the process. That's reasonable. What's not reasonable is a contract that lets the builder keep the entire deposit regardless of when you cancel or what stage the build is in. The contract should also describe what happens if they are the ones who can't perform — your deposit should come back, plus any consequential damages.

15. Will You Sign a Contract That Includes a Right-to-Cure and Binding Arbitration Clause I've Reviewed with a Lawyer?

This is the simplest filter. Have a real estate attorney in your state read the contract before you sign. It costs $300–$700. If the builder refuses to allow contract revisions, refuses to engage with attorney comments, or pressures you to sign on a timeline that prevents an attorney review, you have your answer. Builders who plan to perform welcome the attorney. Builders who don't plan to perform are the ones in a hurry.

The Pattern

Read those fifteen questions together and the shape of the right kind of builder comes into focus. They are licensed. They operate a real factory. They use escrow. They publish references. They sign contracts with arbitration clauses and lien waivers. They are not in a rush. They answer email in complete sentences. They are not the cheapest quote in your inbox.

The cheap quote is almost always the expensive one. The builder who needs the deposit to fund the build is the builder who is going to use yours to finish someone else's. By the time it's your build's turn, the next buyer's deposit isn't there yet and the music has stopped.

PERCH lists builders who have been through a version of this checklist before they show up on the marketplace — state licensure verified, real factory verified, references on file, payment structure reviewed. We are not a replacement for your own diligence, but we are a starting filter. If you'd like the short list of builders in your state who passed this kind of review, join the PERCH waitlist and we'll route you to the operators worth a real conversation.

Data Sources & Further Reading

The specifics in this guide reference the following authoritative sources — check them directly for the current numbers, program rules, and code text before finalizing a purchase or build decision:

• CFPB — Manufactured Housing Consumer Finance research
• HUD manufactured-home construction standards (24 CFR Part 3280)
• Better Business Bureau — check-a-business tool

For federal manufactured-housing dispute and repair resources, see HUD's Manufactured Home Dispute Resolution Program. For financing standards on factory-built product, Fannie Mae MH Advantage and Freddie Mac CHOICEHome set the terms most lenders reference.

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