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Old 10-08-2013, 08:29 PM
 
3 posts, read 19,406 times
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I am purchasing a new construction in MD, signed the contract on 9 Sep and was told that the walk-thru will happen on 23 Sep and closing on 30 Sep. I locked in my rate and my loan was approved.

Well the house was not ready and they said they needed another week, so the new dates were 3 Oct and 9 Oct. The home has apparently passed all building codes and been issued certificate of occupancy

I did my walk-thru, the house was not cleaned and needed a lot of work done - missing items, scratches, chips, paint, fixtures and on.. Got an inspection who found a lot of other issues with the house as well and termed most of the work was sloppy. Among a list of 70 items, the important things being some safety issues such as breaches in the garage firebreak - risk of CO entering living area, contact at the water heater gas line at the furnace, flex duct and wooden truss are in contact with the furnace gas vent pipe, HVAC breaker exceeds or overfused per the rating on compressor unit and a bunch of issues on the roof that because of sloppy work are a risk for future leak.

Throughout the process, there seems to be a rush to close - probably related to year end or bonuses, not sure. I am being forced to close tomorrow and being told that they have been working on the items although not all of them. I know for a fact that they are ignoring the HVAC and gas line issues because it apparently passed the code but per my inspector (who carries a good reputation) that there is no way the house could have passed based on what he saw. He believes the inspector missed these and should come out and reinspect.

I have a final walk-through tomorrow prior to closing and just curious as to what I should be doing. I don't think its right that I be forced to close when the home is not ready and upto standards. Plus I am hearing plenty of horror stories that once you close, you lose all your ground against the builder. I have attached some excerpts from the contract. Any thoughts? What would you do?

Thanks
Attached Thumbnails
New home construction and issue with closing-clip.jpg  
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Old 10-08-2013, 08:53 PM
 
Location: Brentwood, Tennessee
50,000 posts, read 48,209,279 times
Reputation: 98359
Quote:
Originally Posted by longhorn1030 View Post

I did my walk-thru, the house was not cleaned and needed a lot of work done - missing items, scratches, chips, paint, fixtures and on.. Got an inspection who found a lot of other issues with the house as well and termed most of the work was sloppy. Among a list of 70 items, the important things being some safety issues such as breaches in the garage firebreak - risk of CO entering living area, contact at the water heater gas line at the furnace, flex duct and wooden truss are in contact with the furnace gas vent pipe, HVAC breaker exceeds or overfused per the rating on compressor unit and a bunch of issues on the roof that because of sloppy work are a risk for future leak.


Thanks
How did you get a CO? Most of this stuff ^^^^^ sounds like code violations.

Where do you live (ish)?
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Old 10-08-2013, 09:42 PM
Status: "No deal is simple or easy" (set 24 days ago)
 
Location: Just south of Denver since 1989
11,403 posts, read 30,699,169 times
Reputation: 7910
Talk to a local real estate attorney.
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Old 10-08-2013, 09:48 PM
 
11,281 posts, read 46,195,899 times
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I had an almost identical situation on a new house purchased on a pre-build contract. Major aspects of the house had been signed off on the inspection ticket but were not done or complete. With the signed off ticket, the builder got the CO issued and wanted to close on the house.

I called the builder numerous times before reaching a VP of the company and explaining the situation. He went to the site and verified my complaints about them not having finished the structure or systems in the house, then postponed the closing.

The builders see the closing as an opportunity to get out from under their construction loan. OTOH, you are potentially stuck with an unlivable structure while having to pay your mortgage. This defeats the whole purpose of the code inspections leading to the CO. It's one thing to have a walk-through for minor cosmetic and detail issues, it's a whole different situation when the house hasn't been completed to begin with.

Best to contact your builder with the concerns before any closing. It's the only real leverage you have to get your house built and finished. As well, your lender will not be too happy to have funded a loan for a structure that is uninhabitable.

Do not close on the house and take financial responsibility for it unless it truly meets code requirements.

This is home building Basic 101 level stuff; you shouldn't need an attorney to get involved. A reputable builder would want to know that a house has slipped through the inspection process and will seek to rectify the major problems before a closing. Otherwise, if they force you to close on a house that wasn't ready for a CO, you have the basis for a substantial lawsuit against them which they don't want or need. Yours would not be the first time that such a situation has developed and the burden is upon the builder to build the structure that they represented to you and contracted that they would build. Small cosmetic issues are one thing, but code compliance brings in a whole 'nother level of hassles for the builder.
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Old 10-08-2013, 10:18 PM
 
7,439 posts, read 9,184,750 times
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Quote:
Originally Posted by longhorn1030 View Post
What would you do?
I'd contact the building inspector who issued the certificate of occupancy first thing in the morning. Tell him about the inspection report that you received--or, better yet, show him. Ask if he could take a second look at the house paying special attention to the items listed.

If the local building inspector won't do that, complain to a higher-up in the building department, or to the mayor or whomever would be above the top building department official.
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Old 10-09-2013, 09:24 AM
 
1,833 posts, read 2,691,347 times
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If you close, your builder will ignore most of your demands. You lose your clout once they have your money. If you are forced to close, hold back 20% in escrow that can not be released without your signature.

I did this when I was younger (did not hold back escrow) and it was so much work to get my builder (big national chain builder) to do anything afterwards. The builder can schedule things, but if contractors are doing warranty work the paying work ALWAYS comes first and you will just ignored. They wont show up as scheduled, etc, etc...its awful. It took me several months to get it all done, and some of it I just finally gave up on.
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Old 10-09-2013, 10:58 AM
 
3 posts, read 19,406 times
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Everyone thanks for your input...been a busy morning but the settlement date has been postponed for now. A huge stress reliever well at least for now.

The exact reason for postponing is unknown to me...just got a call stating that they are not ready to close right now. We will be shooting for end of this month.

I tried to take all the advice here and actually left a message with the building inspector. Still waiting for his response as he was the one who offered the certificate.

Meanwhile I asked the builders to complete the entire list especially the hot items and we can reschedule an inspection with my home inspector. We will then do the closing if everything is taken care of.

Just curious as I was coerced into locking a rate back in September at 4.5% for 30yrs and that expires tomorrow. The rates have since dropped slightly and was wondering if I could now re-lock at a lower rate. I tried to put this to the lender (who unfortunately is the builder's lender but I took them over others as they offer a significant closing credit) but this is the response I got. I don't understand it, maybe someone here can explain it to me. Does it mean I cannot get the lower rate?

"The rate does not just drop when it expires. In order to go to current pricing, we would have to wait for 30 days to relock the loan. So, I have to ask for an extension. I will extend when the builder moves the closing."

Thanks again...
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Old 10-09-2013, 02:22 PM
 
3,313 posts, read 4,593,544 times
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Quote:
Originally Posted by longhorn1030 View Post
"The rate does not just drop when it expires. In order to go to current pricing, we would have to wait for 30 days to relock the loan. So, I have to ask for an extension. I will extend when the builder moves the closing."
BS and total rip off!!!!!!!!
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Old 10-09-2013, 02:34 PM
 
Location: Brentwood, Tennessee
50,000 posts, read 48,209,279 times
Reputation: 98359
The thing I don't like about the furnace mistakes is that they are things a competent contractor would not do. I mean, maybe the builder is using a bad sub, but honestly I would worry about the quality of construction overall.

You might get a separate mechanical inspector before you close. All that furnace-related stuff sounds very suspicious.
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Old 10-09-2013, 06:47 PM
 
Location: Morrisville, NC
8,306 posts, read 11,872,312 times
Reputation: 7699
I'm not a mortgage expert but the not dropping the rate sounds shady. Somehow I'm guessing that if the rates went up there wouldn't be an issue on their end with it jumping.
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