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Old 04-17-2013, 11:57 AM
 
3,266 posts, read 7,043,285 times
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What are the contingency dates in your contract? There should be a loan contingency.

Not exactly ethical, but I'm sure your lender could issue a Decline Letter, which might trigger a refund. And karma.....
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Old 04-17-2013, 12:09 PM
 
Location: Texas
1,923 posts, read 2,192,750 times
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Quote:
Originally Posted by adonis6000 View Post
No I am working with builder directly.

The question is I don't have any rights or options when the school districts are changed? You think real estate Lawer can help me?

The builder is building a house for you, that you have put a 25K deposit on. The school district changed things around, and you'd like the builder to refund your 25K to you because of something they have no control over, and leave them hanging with a house?

Your only chance is to see if the builder can find another buyer before your closing date, and they might be willing to refund a portion of your deposit. But I bet the contract says it's entirely up to them, and I'm guessing they won't.
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Old 04-17-2013, 12:10 PM
 
5,076 posts, read 7,693,557 times
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Quote:
Originally Posted by adonis6000 View Post
Can you please explain some more in detail? not sure what does that mean!!!!!!!!!!!!!
This is going to depend on the purchase contract you signed, but usually there is an inspection contingency after which you can decline the purchase. Usually it's written in such a way that buyers can decline for any reason based on the results of the inspection. If you're using a buyers agent, keep in mind it's not necessarily in their best interest to help you exercise this option. You may have to sort this out on your own, or better yet with a RE attorney that has no dog in the race since they get paid whether or not the transaction closes. In any event, the combination of a tough, picky inspector and an experienced RE attorney will probably do the trick, and cost far less than $25K.

Aside from the inspection there are a lot of lawyers that specialize in breaking contracts. Unless your builder had a really good lawyer write the agreement, chances are a contract lawyer can find a hole.
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Old 04-17-2013, 12:18 PM
 
Location: North Idaho
20,209 posts, read 24,229,623 times
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It depends a lot on what you mean by "building a new house"

If it is a tract house that you have a deposit on, you will lose the entire $25,000 if you back out.

If it is a custom built house, you owe all of it. 100% of the cost of building the house and believe me, you are going to get sued for the balance if you try to walk away, unless nothing has happened yet with the building. Then perhaps, you will lose just the deposit, as long as that covers the cost of the land, permits, and architect.
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Old 04-17-2013, 01:02 PM
 
2,546 posts, read 3,941,634 times
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Quote:
Originally Posted by oregonwoodsmoke View Post
It depends a lot on what you mean by "building a new house"

If it is a tract house that you have a deposit on, you will lose the entire $25,000 if you back out.

If it is a custom built house, you owe all of it. 100% of the cost of building the house and believe me, you are going to get sued for the balance if you try to walk away, unless nothing has happened yet with the building. Then perhaps, you will lose just the deposit, as long as that covers the cost of the land, permits, and architect.
This is correct. Find a Realtor and 2 things with him/her

1) Figure out how much you can sell your house for once it is built (including the commissions) and compare that to your purchase price. Don't upgrade anything.

2) Figure out how much money you will lose if you walk away right now. As others have stated, this will be in your contract. Unless your builder has no clue, you will likely be responsible for 100% of the construction costs and payment, outlined in your contract. You may be able to stop everything and "true up", but that will likely be way more money than just selling the house once completed.
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Old 04-17-2013, 01:31 PM
 
Location: Boise, ID
7,945 posts, read 21,811,885 times
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Not necessarily true. We build custom homes, and we would never hold someone's feet to the fire for the full cost of the home, or force them to buy. We would, however, keep a portion or all of the earnest money, depending on how much it was and what the circumstances were. We can resell the house, but we can't get back all the time and effort of designing the house for that person. We have a lot of time and money into the project at that point that wouldn't have happened building the home as a spec house, which is what it becomes at that point, plus if the house doesn't resell immediately, we have additional carrying costs until it does sell. Our contracts always have a portion of the earnest money that becomes nonrefundable for any reason once the house reaches a certain stage, usually when the roof goes on. That money is no longer dependant on any contingencies. The only reason it could be refunded would be if the builder/seller didn't perform on the contract (ie didn't build the house, or refused to sell).

So as a builder, I don't feel like you should be forced to buy the house, but if it was a custom build, you should expect to lose at least some, and possibly all of your earnest money. Depending on what your contract with your agent says, if you just plain change your mind, you may owe them some commission, as well.

It also depends somewhat on how resellable the house is. We had someone who had us design them a house with only 2 bedrooms, both master suites. That is a difficult resell, so we required a large earnest money deposit, all non-refundable except if builder defaults. Meaning if the buyer couldn't close for any reason, they forfeit all that money.

So you need to read your contract closely to see exactly what it says. I support the idea of getting a real estate attorney to tell you exactly what your options will be.
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Old 04-17-2013, 01:40 PM
 
Location: NJ
17,579 posts, read 37,470,827 times
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One things seems clear from your responses. You almost certainly needed either an agent or an attorney working with you. Did you just take the contract from the builder and not even have someone look at it?
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Old 04-17-2013, 02:01 PM
 
Location: Annandale, VA
5,098 posts, read 4,009,482 times
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Quote:
Originally Posted by Pfhtex View Post
What are the contingency dates in your contract? There should be a loan contingency.

Not exactly ethical, but I'm sure your lender could issue a Decline Letter, which might trigger a refund. And karma.....

When you buy from a builder, they sometimes require you to use THEIR lender who will do what they can to qualify you if you can't get other financing.. If you screw up your finances to get out of it, they will sue you for fraud. They will give you terms you don't like like a 12% interest rate on a 40yr mortgage, but you WILL QUALIFY.
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Old 04-17-2013, 02:14 PM
 
2,546 posts, read 3,941,634 times
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Quote:
Originally Posted by Lacerta View Post
Not necessarily true. We build custom homes, and we would never hold someone's feet to the fire for the full cost of the home, or force them to buy. We would, however, keep a portion or all of the earnest money, depending on how much it was and what the circumstances were. We can resell the house, but we can't get back all the time and effort of designing the house for that person. We have a lot of time and money into the project at that point that wouldn't have happened building the home as a spec house, which is what it becomes at that point, plus if the house doesn't resell immediately, we have additional carrying costs until it does sell. Our contracts always have a portion of the earnest money that becomes nonrefundable for any reason once the house reaches a certain stage, usually when the roof goes on. That money is no longer dependant on any contingencies. The only reason it could be refunded would be if the builder/seller didn't perform on the contract (ie didn't build the house, or refused to sell).

So as a builder, I don't feel like you should be forced to buy the house, but if it was a custom build, you should expect to lose at least some, and possibly all of your earnest money. Depending on what your contract with your agent says, if you just plain change your mind, you may owe them some commission, as well.

It also depends somewhat on how resellable the house is. We had someone who had us design them a house with only 2 bedrooms, both master suites. That is a difficult resell, so we required a large earnest money deposit, all non-refundable except if builder defaults. Meaning if the buyer couldn't close for any reason, they forfeit all that money.

So you need to read your contract closely to see exactly what it says. I support the idea of getting a real estate attorney to tell you exactly what your options will be.
How do you collect payment? I had a custom home built and the builder was paid 5 equal draws after approximately 20% of the work was completed (this was based on a checklist provided by the bank).

So, the worst case scenario is that the builder loses 20% of his money (material, labor, profit), if I or the bank didn't pay. Of course, he would then sue me and/or attempt to take possession of the home (which was on my property), so that would be a legal fight.
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Old 04-17-2013, 02:22 PM
 
Location: Boise, ID
7,945 posts, read 21,811,885 times
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Quote:
Originally Posted by blazerj View Post
How do you collect payment? I had a custom home built and the builder was paid 5 equal draws after approximately 20% of the work was completed (this was based on a checklist provided by the bank).

So, the worst case scenario is that the builder loses 20% of his money (material, labor, profit), if I or the bank didn't pay. Of course, he would then sue me and/or attempt to take possession of the home (which was on my property), so that would be a legal fight.
During construction, we own the lot and we own the house. We get construction draws from the bank, similiar to what you've stated. When the house is finished, we sell it to the buyer. We don't have to sue for possession, or anything of the kind. We own it, pure and simple.
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