Use builder's suggested closing attorney OR get my own? (sales, real estate)
Raleigh, Durham, Chapel Hill, CaryThe Triangle Area
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We're very early in the real estate process, and I have a question. Please take the time to read this!
We're first time homebuyers, purchasing a new home from DR Horton (which hasn't been built yet). We have been pre-approved and put our offer in on the house, which DR Horton accepted today. Tomorrow, we have to sign a small amendment on the contract (more on that in a second). One of the first questions they asked was if I wanted to use their closing attorney or get my own. I said I was fine with using theirs, and my wife is uneasy about it.
The amendment is that our house is to be complete by Nov 30 (last day for the $8000 first-time-homebuyers credit). If, at any point during the home being built, they fall behind their schedule (which they're going to lay out for me soon) then we can back out with the intent that we have enough time to buy a different house before Nov 30th! They told us the schedule would actually commence on October 30th so I have nothing to worry about (or so they say).
With this being said, should I get my own closing attorney? Isn't it a conflict of interest using theirs? What if the schedule falls behind and we have to back out and they give us grief and I therefore need an attorney (that's not on the seller's side!)!? Or, am I confusing closing attorney with a attorney with which I can file a lawsuit (which I TOTALLY do not plan to do, but I want to be safe rather than sorry)? Should I use DR Horton's suggested attorney and if it goes haywire at the end, get another attorney to file a lawsuit if need be?
I would be very careful in your situation. This is one of those instances where you will definitely need to consult with a professional. Are you working with an exclusive buyers agent to represent you and only you? Your realtor would be the first person on the double-check list. Note it is not at all to your advantage if you do not have a buyers agent and instead worked directly with the sales agent of the builder. Those agents are on the builders side, not yours.
I am surprised they have indicated that they could have the home finished by Nov 30, when ground hasn't been broken yet. I am in the search for a home myself and the minimum time frame for new construction seems to be closer to 6 months from what I have seen. And that is with a builder that doesn't have any cash flow problems to pay the subcontractors to do the work on time. You also have to take into account delays and other issues that will naturally come up during the process.
Putting the deadline on Nov 30th is in my opinion cutting it way too close if you want to absolutely insure you qualify for the 8,000 tax credit. You aren't even leaving yourself 1 day of buffer room for issues or delays. Remember that the Nov 30th date isn't when the house has to be completed, you have to have closed on the house, all documents signed and have keys in hand by the 30th to qualify for the credit.
One thing you could try to do is to put a clause in the contract that stipulates if you don't close by Nov 30th and end up not qualifying for the tax credit, to have the builder provide the 8,000 in cash/upgrades/whatever to replace it.
At the very least I'd call around and speak with several attorneys who specialize in mortgage closings to get their opinion and get a feel for what you are getting into.
I would be very careful in your situation. This is one of those instances where you will definitely need to consult with a professional. Are you working with an exclusive buyers agent to represent you and only you? Your realtor would be the first person on the double-check list. Note it is not at all to your advantage if you do not have a buyers agent and instead worked directly with the sales agent of the builder. Those agents are on the builders side, not yours.
I am surprised they have indicated that they could have the home finished by Nov 30, when ground hasn't been broken yet. I am in the search for a home myself and the minimum time frame for new construction seems to be closer to 6 months from what I have seen. And that is with a builder that doesn't have any cash flow problems to pay the subcontractors to do the work on time. You also have to take into account delays and other issues that will naturally come up during the process.
Putting the deadline on Nov 30th is in my opinion cutting it way too close if you want to absolutely insure you qualify for the 8,000 tax credit. You aren't even leaving yourself 1 day of buffer room for issues or delays. Remember that the Nov 30th date isn't when the house has to be completed, you have to have closed on the house, all documents signed and have keys in hand by the 30th to qualify for the credit.
One thing you could try to do is to put a clause in the contract that stipulates if you don't close by Nov 30th and end up not qualifying for the tax credit, to have the builder provide the 8,000 in cash/upgrades/whatever to replace it.
At the very least I'd call around and speak with several attorneys who specialize in mortgage closings to get their opinion and get a feel for what you are getting into.
I don't see an issue with the deadline at all.
Client had footers poured today.
Will close in October if weather pushes it past September.
Production builders make it happen.
DR Horton is definitely a production builder.
I would not sign anything at all without your own attorney reviewing it very carefully and giving you the ok.
Mike, I usually think you are right on, but in this case I must disagree strongly, if the timing is no problem then make the deadline much sooner so that the prospective buyers will have time to do something else if DH cannot be ready. 8K is a ton of money to mess around with!
I would not sign anything at all without your own attorney reviewing it very carefully and giving you the ok.
Mike, I usually think you are right on, but in this case I must disagree strongly, if the timing is no problem then make the deadline much sooner so that the prospective buyers will have time to do something else if DH cannot be ready. 8K is a ton of money to mess around with!
Cody,
Let me clarify...
I don't see a logistical production issue preventing easily hitting the deadline.
No way did I intend to give contract advice.
Mike, fair enough. I am just speaking from experience, once you put a deadline in a contract, that is the date everyone worries about and shoots for. So, if this particular contract were to have a 11\30 deadline, I am sure that DH will find other things to worry about first and only when this date gets troublesome really get going. Now maybe DH is different and they come in months ahead of deadlines, I doubt it though!
I recently wrote an offer for a home in Fuquay Varina. The estimated closing date is November, 2009.
We did put in an addendum stating that if the builder did not have the home ready to close by the end of November and my buyers lost the $8,000 tax credit, the builder would agree to credit that $8,000 to them and they signed it.
Closing attorney works for the buyer, to some degree. I, as a Realtor, have no problem having my buyers use the builder's attorney; however, I am there to oversee the whole process. If the OP has no buyer's agent...I would suggest he have SOMEONE working for him!
I appreciate all the great advice! I do have a buyer's agent, plus my dad is an agent (in a different state) and he has me send him all the paperwork so he can check if anything sounds fishy.
We tried to put the $8000 credit in the addendum (if the builder doesn't finish by 11/30, they give us $8000), but they didn't agree. They countered with the offer to let us out of the contract at any time if they fall behind schedule.
I appreciate all the great advice! I do have a buyer's agent, plus my dad is an agent (in a different state) and he has me send him all the paperwork so he can check if anything sounds fishy.
We tried to put the $8000 credit in the addendum (if the builder doesn't finish by 11/30, they give us $8000), but they didn't agree. They countered with the offer to let us out of the contract at any time if they fall behind schedule.
Interesting how they are so adamant that they WILL finish on time but won't put their money on the line!
I wouldn't worry about using the builder's attorney as typically the attorney is there to simply make sure the paperwork is correct, and that you have clear title. Also, most builders require you to use their approved attorney, so I'm surprised you even have a choice. Especially with a builder as big as DR Horton.
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