Delay on New Construction - What can I do? HELP (2015, agent)
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We sign a purchase agreement and we are supposed to close in less than 5 days, the house is not built yet. No dry wall or concrete ground, nothing. Can we get out of this agreement?
I am in a situation where we signed up for a new construction of a single family home in a new development. This is the second phase of the community. This is also a small builder who is local to the state of Georgia. We first reserved the lot in Jan 2015. After further details were released, we then signed the contract in May 2015 with the closing date to be in October 2015. We also picked out upgrades early on in the contract. Throughout the process of waiting, no formal communication was made from the builder to the buyer. I’ve had to call the realtor every now and then to see what is going on. The constant response I would get was “the builder is still waiting on the permits, check back in a couple weeks”. Every so often, we would drive by the community to see if anything was being performed.
The site was cleared and roads were paved, but nothing else was done.
Just a couple weeks back, they started working on some other lots (not the one we picked). The realtor said they just got permits for a couple lots that were signed up before me and they have started. The fact is, we are supposed to close later this month, and construction has not even started yet. This has been very stressful as I am renting a home and cannot plan properly as result of this. The realtor has not given me any details as to what’s going on and why there’s such a significant delay. No formal communication has been made. I’m wondering if there are issues going on that the builder is hiding from us.
I made my own investigation and got in touch with the county to find out the status of the permit. The building permit has not even been applied for! This is clear lack of performance in my opinion. I asked the realtor who represent the builder to provide compensation or issue a full refund of my deposit given, 6 months ago. The response was that the Builders position is that they stated early in the process that is would not be clear when the start date would be and they don’t be paying compensation.
I checked the contract and it says the following:
Delays: Seller shall have no liability for any delays in construction caused by strikes, acts of God or nature, sewer or other governmental moratoriums or delays directly caused by Buyer’s change orders and/or selection of materials. In the event of such delays, the closing date and the date to complete Seller’s other obligations herein may be extended, in the sole discretion of Seller, by the number of days resulting from such delays; provided that, Seller shall notify Buyer of the cause of the delay and the new closing date within ten (10) days following the end of the month in which the delay occurs
I said to in the email, if compensation cannot be given, then I would need a full refund. The realtor’s response was that “the builder will not give a refund on construction or upgrade deposit”. I then said I wanted to file a formal complain to the builder and request an address and point of contact to send this to. I also said I will be communicating this to the BBB and social media and this is unrealistic, unacceptable, and unprofessional. I am still waiting for a response.
My question is can anyone suggestion or recommend a way to get my deposit back? Should I get a Real Estate attorney involved?
First, unless you have a contract that specifically states a closing date, you don't have a closing date. Usually in new construction, the closing date isn't set until about 2 weeks before. It's too difficult to set a date with new construction because of all the potential delays. At best, I imagine you had a projected finish date and that was only a best guess at the time.
The answer to your question is yes, you should talk to a real estate attorney and ask him/her if the builder is in default of the contract (by virtue of not applying for a permit which will need to be confirmed by the attorney) but most new construction contracts I've seen only state that the project will be completed by a certain date (i.e. two years out) and, if yours includes that type of language and you haven't passed that point, you may be on the hook. I hat to say it but, at this point, I'd stop asking your agent for info and go directly to the RE attorney from this point on. Sorry about the problem!
First, unless you have a contract that specifically states a closing date, you don't have a closing date. Usually in new construction, the closing date isn't set until about 2 weeks before. It's too difficult to set a date with new construction because of all the potential delays. At best, I imagine you had a projected finish date and that was only a best guess at the time.
We set closing dates, excavation dates, etc in our new build contracts here at the time we write the offer.
There is nothing in the contract that says anything about 2 years. The contract has a closing date which is today October 20.
Also, I got a email from the realtor who represents the builder. He sent me an amendment with a new closing date of Feb 2016 (3 months from now). He said I need to sign this or I will not be compliant. I don't know what that means.
So I spoke with a Real Estate Attorney today, and he advised that I wait to hear back from the builder. I e-mailed the builder a spreadsheet of expected costs I will incur with the new closing date (~3 months from now). The Lawyer also told me not to sign the amendment. He says the Builder is mainly at fault as he has not acted in Good Faith (I signed a contract with them 5-6 months ago and the builder agreed to build me a home by October). As of now, they haven't even broken ground.
We set closing dates, excavation dates, etc in our new build contracts here at the time we write the offer.
Here, I would expect a custom builder's contract to have a stipulated completion date that is well padded to allow for delays (and possibly language outlining penalties for delays) but not with a builder of a subdivision. In our area, all of the new construction I see is done by larger companies or a builder developing the whole subdivision and they all seem to do it the way I mentioned. That's not to say that there are no small or custom builders but I have never had an experience with them.
I would follow you attorneys advice. Did you hire them or just call for advice? Who recommended them? Did you send your lawyer your complete contract? I would have no contact with the builder or real estate agent if you indeed hired them to represent you. Let your attorney handle all contact and see what happens. Real Estate agents want the transaction to go through because there is a commission involved and they may not be advising you in your best interest.
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