In an economic environment where new home sales are at incredible lows compared to their heyday just a few years ago and home builder confidence has just hit a 9 month low, it is surprising to me that homebuilders continue to put forward exceedingly one-sided contracts.

These homebuilders seem willing to kill a deal before agreeing to anything but the most routine changes. A real estate agent who represents a buyer is well-advised to strongly urge him to retain legal counsel to review the risks involved with a home builder contract; otherwise the client may end up assuming significant risk without understanding the implications of the contract he has signed. This article touches on 10 general items of concern:. It was approved by the Arizona Department of Real Estate.

Negotiating With Homebuilders: 10 Things You Need to Know | Nagle Law Group

We would really like to build [your client] … a home but you would need to agree to the terms and conditions as written in the purchase contract. In the current environment where homebuilders are anxious to sell homes, this kind of an attitude is unacceptable and buyers should at least be made aware of the unconscionable provisions in many of these contracts. Robert Nagle is a partner with Nagle Law Group, focusing on residential transactional matters, and can be reached at or robert.

You must be logged in to post a comment. Homeowner Options Is it possible that the law could change and AZ would no longer be a non-recourse state?

Deficiency Risks Negotiating With Homebuilders: This article touches on 10 general items of concern: Earnest Money should only be held by the title insurance company and NOT by the homebuilder. There are still many circumstances whereby the Seller could fail to perform.

Homebuilders, Their Business, and Third Party Escrow Companies | Tucson Real Estate Blog

If so, the Buyer may be looking at an uphill battle in getting his money back, which oftentimes is a sum that is disproportionate to the actual damages that a home builder actually incurs. Even if the contract provides that the Buyer has the right to terminate, homebuilder contracts may provide that a portion of the Earnest Money nonetheless gets to be retained by the homebuilder!

With respect to the mortgage loan contingency, make sure that the Buyer as well as the homebuilder get to approve the loan terms. In addition, watch out for hidden costs such as language that states that if Buyer determines to select a different lender later in time, Seller has right to cancel all incentives, all earnest money gets forfeited to Seller, and Buyer has to put up an additional earnest money!

It is customary in Arizona for the parties to split escrow fees and for the seller to pay for title insurance. Be wary of self-serving language in the contract such as: Leave a Reply Cancel reply You must be logged in to post a comment. Proudly powered by WordPress.