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Old 02-27-2008, 11:55 AM
 
5 posts, read 9,594 times
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This is my first post on this forum, but I've been lurking. Something has been bothering me, and I can stay silent no longer. I need advice.

I am new to the Charlotte area and signed a contract to have a home built in Huntersville back in December. I don't want to say what builder, but here is the problem. This particular builder does not build spec houses, but rather purchases lots from the developer as it gets a buyer or a group of buyers. What only became clear to me recently is that the purchase of the land from the developer only occurs AFTER a buyers signs a contract to buy a house (and puts down a sizeable downpayment). SO, essentially, I bought a house from a builder that did not actually "own" the lot at the time that I bought. Does it matter? Maybe not usually, but here is the problem. There is some "issue" between the builder and the developer that has prevented the actual sale of the lots to the builder - therefore, construction cannot begin. That leaves me, and other buyers, with an indefinite future as they seek to "work out" whatever the problem is. We have not been given any idea what the outstanding issue is - we were just told that it has delayed building.

It seems a basic contract principle that you can only sell what you own. At the very least, it is deceptive for a builder to enter into a contract as the "seller" before it actually has a lot in its possession. Anyone have any idea how builders are getting away with this? I have heard there is a similar problem (same builder) in a different community in Concord. Anyone gone through this? Any insight would be appreciated.
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Old 02-27-2008, 12:02 PM
 
Location: Up above the world so high!
45,270 posts, read 88,319,180 times
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Quote:
Originally Posted by MPM1230 View Post
This is my first post on this forum, but I've been lurking. Something has been bothering me, and I can stay silent no longer. I need advice.

I am new to the Charlotte area and signed a contract to have a home built in Huntersville back in December. I don't want to say what builder, but here is the problem. This particular builder does not build spec houses, but rather purchases lots from the developer as it gets a buyer or a group of buyers. What only became clear to me recently is that the purchase of the land from the developer only occurs AFTER a buyers signs a contract to buy a house (and puts down a sizeable downpayment). SO, essentially, I bought a house from a builder that did not actually "own" the lot at the time that I bought. Does it matter? Maybe not usually, but here is the problem. There is some "issue" between the builder and the developer that has prevented the actual sale of the lots to the builder - therefore, construction cannot begin. That leaves me, and other buyers, with an indefinite future as they seek to "work out" whatever the problem is. We have not been given any idea what the outstanding issue is - we were just told that it has delayed building.

It seems a basic contract principle that you can only sell what you own. At the very least, it is deceptive for a builder to enter into a contract as the "seller" before it actually has a lot in its possession. Anyone have any idea how builders are getting away with this? I have heard there is a similar problem (same builder) in a different community in Concord. Anyone gone through this? Any insight would be appreciated.
Sorry, I have no firsthand experience with this, however, I do think I would contact an attorney specializing in real estate law to get a professional opinion. The whole thing sounds really shady to me.
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Old 02-27-2008, 12:03 PM
 
Location: State of Being
35,885 posts, read 67,023,037 times
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Quote:
Originally Posted by MPM1230 View Post
This is my first post on this forum, but I've been lurking. Something has been bothering me, and I can stay silent no longer. I need advice.

I am new to the Charlotte area and signed a contract to have a home built in Huntersville back in December. I don't want to say what builder, but here is the problem. This particular builder does not build spec houses, but rather purchases lots from the developer as it gets a buyer or a group of buyers. What only became clear to me recently is that the purchase of the land from the developer only occurs AFTER a buyers signs a contract to buy a house (and puts down a sizeable downpayment). SO, essentially, I bought a house from a builder that did not actually "own" the lot at the time that I bought. Does it matter? Maybe not usually, but here is the problem. There is some "issue" between the builder and the developer that has prevented the actual sale of the lots to the builder - therefore, construction cannot begin. That leaves me, and other buyers, with an indefinite future as they seek to "work out" whatever the problem is. We have not been given any idea what the outstanding issue is - we were just told that it has delayed building.

It seems a basic contract principle that you can only sell what you own. At the very least, it is deceptive for a builder to enter into a contract as the "seller" before it actually has a lot in its possession. Anyone have any idea how builders are getting away with this? I have heard there is a similar problem (same builder) in a different community in Concord. Anyone gone through this? Any insight would be appreciated.
Who has your money, meaning - who cashed your check? Is it being held in an escrow account?

Also - did you work w/ a realtor? Do you have a copy of your contract? Have you consulted a real estate attorney?

Last edited by brokensky; 02-27-2008 at 12:04 PM.. Reason: added info
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Old 02-27-2008, 12:04 PM
 
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The builder is required to hold it in an escrow account per the contract.
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Old 02-27-2008, 12:08 PM
 
Location: Huntersville
1,521 posts, read 4,476,829 times
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M/I does this in Huntersville but they have a agreement that all lots are sold to them from the developer they are basically guaranteed the lots if you will. If you are buying a lot in a new phase it is hard for the builder to determine the exact date the lots will be released. Especially if they are cutting in roads etc etc still.

If you are ready to walk write them a nice letter explaining that enough is enough and if they cannot give you an exact start time on the build you would like all earnest money back. This should kick start it for you...

Good luck!
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Old 02-27-2008, 12:09 PM
 
Location: Up above the world so high!
45,270 posts, read 88,319,180 times
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Quote:
Originally Posted by MPM1230 View Post
The builder is required to hold it in an escrow account per the contract.
I would be looking at breaking that contract and getting my money back. There are just too many nice areas to buy in to have to put up with this!
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Old 02-27-2008, 12:10 PM
 
Location: Up above the world so high!
45,270 posts, read 88,319,180 times
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Originally Posted by QC Misfit View Post
M/I does this in Huntersville but they have a agreement that all lots are sold to them from the developer they are basically guaranteed the lots if you will. If you are buying a lot in a new phase it is hard for the builder to determine the exact date the lots will be released. Especially if they are cutting in roads etc etc still.

If you are ready to walk write them a nice letter explaining that enough is enough and if they cannot give you an exact start time on the build you would like all earnest money back. This should kick start it for you...

Good luck!

Great info, I was hoping a realtor would chime in here

Wouldn't you walk if the delays had been extreme and you lost confidence in the builder?
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Old 02-27-2008, 12:10 PM
 
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Oh, I didn't see your second question. Yes I worked with a realtor. She is researching the problem, but hasn't had any success in getting a straight answer from the builder. I do have the contract. The only mention that even remotely speaks to this is in the provision on delays - essentially it states that the seller has no control over, among other things, developer related delays. It gives them 90 days to resolve - after which I can get my money back. I think the issue is more fundamental than the delay issue - it relates to even the builder being characterized as the "seller" at all.

I guess what frustrates me the most is that I am sure that I could make a fuss and get my money back, but I really want this house in this community.

I do not yet have a real estate attorney.
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Old 02-27-2008, 12:11 PM
 
Location: Up above the world so high!
45,270 posts, read 88,319,180 times
Reputation: 39846
Quote:
Originally Posted by MPM1230 View Post
Oh, I didn't see your second question. Yes I worked with a realtor. She is researching the problem, but hasn't had any success in getting a straight answer from the builder. I do have the contract. The only mention that even remotely speaks to this is in the provision on delays - essentially it states that the seller has no control over, among other things, developer related delays. It gives them 90 days to resolve - after which I can get my money back. I think the issue is more fundamental than the delay issue - it relates to even the builder being characterized as the "seller" at all.

I guess what frustrates me the most is that I am sure that I could make a fuss and get my money back, but I really want this house in this community.

I do not yet have a real estate attorney.

Perhaps if you tell us the community some of us could make recommendations for other similar communities you might like even better?
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Old 02-27-2008, 12:15 PM
 
5 posts, read 9,594 times
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Wow, you all are fast! I knew you would be helpful. While I was typing my last response, the realtor chimed in. Thanks. You have pinpointed the problem - this is a new builder with this devloper, and it's the first phase. I wish that the builder had been a bit more honest about the process. A part of the reason why we bought where we did was the timing - we wanted to get into something as soon as possible. But we really fell in love with the area.

I will hold off a bit longer - maybe another month or so - and then attempt to get my money back. Thanks for the insight.
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