Protect Yourself if You’re Buying New Construction
Buying new construction certainly sounds exciting. After all, doesn’t everyone dream of a customized home designed to their tastes? You may hire the perfect builders and go with their team. In the meantime, you should also retain an experienced real estate attorney to ensure your interests are protected.
The decision to purchase a custom-built home differs from buying residential property that’s gone through a number of owners. You ultimately establish a relationship with the builder. In most cases, the builder acts as the general contractor and hires a variety of tradespeople to work on your new house.
You need to be careful about getting caught up in the moment. Most builders have their own contracts. However, it shouldn’t come as a surprise. The agreement almost always shows a preference for the builder’s interests – rather than yours.
You should know that a number of issues can arise when building a new home. Some may be unavoidable and cause you angst. No doubt you’ll experience a great deal of anxiety if you run into construction delays. How will this impact the sale of your current home? Where will you live in the meantime?
The contract you sign with the builder becomes a binding agreement. It is therefore critical that you understand how it protects you – and also obligates you. Therefore, you need to ensure that the lawyer you retain has experience in drafting contracts between builders and purchasers of new construction.
New Construction Contracts
For starters, you might want to take a look at the contract presented by the builder. It may be very short – or contain a great deal of fine print. Either case warrants caution.
Truth be told, when you hire a builder, your contract needs to be specific. You want to make sure there are no grey areas. This isn’t just about what the project will cost. Indeed, your concerns include at least the following:
- Payments: The contract not only reflects the total cost, but also sets up a payment schedule. Often, this starts with inclusion of dates for the initial down payment and periodic payments during different phases of work. A financing contingency should be part of the contract.
- Scope of the Project: When you enter into an agreement with a builder, you need to understand exactly what is included. At the very least, the contract needs to identify the specifications of the job to ensure the work complies with your expectations. For example, are you under the impression you are signing up for a four-bedroom home with three baths? The architect’s plans generally become an addendum to the agreement.
Will the contractor obtain the necessary permits and hire subcontractors? You’ll also want your agreement to contain specifics regarding materials and equipment.
- Timing of the Work: Assuredly, what can happen – often does. One of the biggest complaints for buyers of new construction concerns delays. The agreement with the builder includes preliminary dates and addresses how missed deadlines are treated.
Believe it or not, these are some basic concepts addressed in new construction contracts. Your attorney will also ensure that your agreement covers how changes or additions are covered.
Additionally, you need to know what happens if either side breaches the contract. Additionally, you may have disputes with the builder. Should they be decided in court or in arbitration?
Contact Us
Mazzoni Valvano Szewczyk & Karam assists clients purchasing new construction from the contract stage to conclusion of the project. Contact our offices if you need help ensuring your interests are protected.
