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So I have an interesting situation. Back in September we signed a contract with a modular home builder. They offer a package deal where they purchase the land, build the house, pay for any improvements desired, then sell it to you outright as a package deal, this allows the buyer to forgo the hassle of a construction loan.
The home is now complete, however the mortgage broker (agent?) who is the one this company works with exclusively, has moved to a different bank, so I'm working with a different broker that isn't as familiar with this companies practice, so is treating this like a normal loan (I've a feeling the prev. broker would slide things under the table since it was an unconventional situation).
Back in December, prior to the house being put on the foundation, we closed on the land, and it was transferred into my name (originally we weren't going to close on the land until closing since we were purchasing it from family but that changed last minute). At the time of the closing, we signed a promissory note for 139k, which I thought was very odd since our total cost was 193k less our down payment. I shrugged it off and assumed it was due to that was what was completed at that time or something.
Now that its completed, my lender is working on finalizing everything, however she says since the property is already in our name, she has to treat it as a re-fi, paying off the promissory note which isn't the correct amount. The builders financial person is insisting to my bank that 139k is the total amount for everything.
I pulled out my contract and they left the land (45k) off.
I've emailed the builder notifying them of the mistake, and asking that we redo the promissory note to the correct amount so that we can close on the property ASAP (scheduled for our CO inspection tomorrow).
Now my question, if I hadn't insisted that the amount was wrong and notified them of their mistake, could I force them to honor the contracted price, which would then stiff them that 45k? Since that is also the amount of the promissory note (NOTE! I HAVE NO INTENTION OF DOING THAT! JUST THEORETICAL).
Just one of those things that popped in my head early on.
Note this was a fixed price contract which was not subject to adjustment, however the land was not listed as one of the costs.
If the original contract was for them to purchase the land, build the house, and then sell that "package" to you once completed, the cost of the land would be included in that total price--regardless of whether it was specifically itemized as a cost.
Since you went ahead and acquired the land separately, it only seems to make sense that they reduce that land value from your purchase price. Did you put $9,000 down when you executed the contract? Otherwise, the numbers don't add up.
I put down a little over $9k at the beginning as a downpayment to order the house.
The contract was for the land, house, and two outbuildings. When we signed the contract however, they left off the cost of the land (and it wasn't listed in the itemized charges). My "contract" is for the house to be ordered and built for a total cost of 139k. In my "quote" the land was included, however when they created the contract it was not added in, so the total numbers were less that.
They purchased the land cash, just placed it in my name and created a promissory note, but at the time we signed the contract, they weren't planning on doing that and instead when we went to closing the land would be transferred since it was family, so the land was "supposed" to be lumped in and paid for at closing. However, last minute they changed their mind prior to putting the house on the foundation and bought it themselves, acted as a deed of trust and put the land in my name.
They have already said they screwed up and forgot to include the price of the land. My question is more, since I have a contract that states that I will be paying them the 139k, and that's what my promissory on file with the county says, "could" I of been a jerk and said "sorry I'm only paying you the 139k we signed".
Purely theoretical, just something I found interesting.
Basically its like if you go under contract to purchase a house from a builder in a new subdivision. The contract inadvertently is written for the wrong amount (say a cheaper model), yet your contract still specifies your higher end model. Would that builder be required to honor the cheaper price?
Back in December, prior to the house being put on the foundation, we closed on the land, and it was transferred into my name (originally we weren't going to close on the land until closing since we were purchasing it from family but that changed last minute).
Quote:
Originally Posted by jumper_girl221
They purchased the land cash, just placed it in my name and created a promissory note, but at the time we signed the contract, they weren't planning on doing that and instead when we went to closing the land would be transferred since it was family...
Okay, the way you wrote it made it sound like you had purchased the land separately. For them to have purchased it and put it into your name just sounds...odd.
A mistakenly written contract could simply be considered a mutual mistake and unenforceable on those terms...but a person can always try being a jerk.
To have a valid "contract", you need to have a "meeting of the minds" and if you both understand what was supposed to happen, but a mistake took place in the actual implementation, the contract can be construed as invalid. You just need to correct it and move on.
Okay, the way you wrote it made it sound like you had purchased the land separately. For them to have purchased it and put it into your name just sounds...odd.
A mistakenly written contract could simply be considered a mutual mistake and unenforceable on those terms...but a person can always try being a jerk.
Oh I'm not being a jerk, she was insisting to my lender that the amount included everything and was correct. She emailed my lender when she contacted her asking for the full amount saying "the 139k includes the land and house, there's no additional moneys owed". When I noticed the lower amount on the paperwork and contacted my lender and she explained, I went home and pulled out my contract and read through it, and realized the discrepancy and notified them and they are revising the promissory note now.
I COULD have just been quiet and we would have closed on the property for the lower amount (although I'm sure they would have figured it out eventually and notified us).
That's why I mean this is purely theoretical, I've already notified them of the mistake and the paperwork is being revised for the correct, higher amount. BUT if I were to not have done that...would the fact that I both have a contract and promissory note for the wrong, lower amount been construed as them contracting for a lower rate.
Just one of those questions you wonder laying in bed at night.
That's why I mean this is purely theoretical, I've already notified them of the mistake and the paperwork is being revised for the correct, higher amount. BUT if I were to not have done that...would the fact that I both have a contract and promissory note for the wrong, lower amount been construed as them contracting for a lower rate.
Just one of those questions you wonder laying in bed at night.
Real estate contracts need to be in writing to be enforceable, but even written contracts can be subject to mistakes. In the case of mutual mistakes--where both sides did not catch an issue which was counter to their understanding--a written contract can be overturned. In each instance, it depends upon the specific facts and circumstances surrounding the contract. In your case, it seems rather clear that both sides had agreed to the higher amount (and you probably saved yourself a lawsuit by being forthright--so you should sleep better at night).
Where it becomes problematic is when one side claims that a "mutual mistake" has been made but, in fact, it was only a one-sided misunderstanding. That can lead to some interesting court cases. That's why it is particularly important for someone to fully understand what they are signing--and to get appropriate legal advice when they are not certain about the full terms and conditions of a contract.
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