Financing in Fremont>Question Details

srudd3, Home Buyer in Saint Louis, MO

Contingency Release from builder states builder can sue me for full price of home, legal fees etc. I have loan commitment & signed sales contract

Asked by srudd3, Saint Louis, MO Wed Nov 20, 2013

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9
If you have a genuine hardship you should talk to the builder first. Generally, they don't want a bad reputation in the market because they're selling a community and not just one house. If this option doesn't work well, then I would recommend speaking with an attorney.
0 votes Thank Flag Link Tue Nov 26, 2013
Hi Srudd3,

I agree with Carl. Given your situation they would hopefully oblige (bring proof of the layoffs).
If this does not work a review of the contract by an RE Attorney followed by a stern letter might solve the issue.

-Steve
0 votes Thank Flag Link Sun Nov 24, 2013
If you've lost your job(s) and no longer qualify for the loan to purchase the home, I would go back to the developer, explain your unexpected hardship and ask to be voluntarily removed form the contract. I'd also ask for my deposit to be refunded. Many builders understand that this is a genuine hardship and will cooperate. If your builder does not want to cooperate, then I'd recommend hiring an attorney to help.
0 votes Thank Flag Link Sun Nov 24, 2013
Release states I would forfeit all monies down which is substantial at this point
0 votes Thank Flag Link Sat Nov 23, 2013
No I am not having second thoughts but I have been unexpectedly laid off from two jobs and would hate to sign a release then find out I no longer have a job but have to go ahead and buy the house even though at that time I would not qualify for a loan
0 votes Thank Flag Link Sat Nov 23, 2013
See if you can release all other contingencies except for the loan contingency which would protect your deposit if you can not get the loan (which would be the case if you were jobless).
Flag Sun Nov 24, 2013
I have never heard of such a thing. There should be a liquidated damages clause in the contract. Typically real estate contracts call for a maximum of 3% but sometimes developers ask for more.
0 votes Thank Flag Link Thu Nov 21, 2013
Hi srudd3,

Are you having second thoughts about buying? Please clarify your question.

-Steve
0 votes Thank Flag Link Thu Nov 21, 2013
What does the liquidated damages clause say?

J.R. Thrasher
http://www.SanDiegoRealEstateVeterans.com
619-929-0105
0 votes Thank Flag Link Thu Nov 21, 2013
It sounds like you are not backing out just trying to understand a form you received.

Agents are not lawyers so we can not practice law by giving you legal advice but my understanding is: once you release all the contingencies: if you decided to back out, they would be able to keep your deposit and sue you for any loss they may incur (such as the legal fees & the difference on what you had agreed to pay for the home & the price they get for it from another buyer) . They could sue you for the full price of the home &/or punitive damages but I doubt they would be able to win more than their actual losses since it is unlikely that they wouldn't be able to resell the home to someone else.

Read your contract and see if there is a 'liquidated damages clause' (usually a paragraph) which would have spelled out at the time the contract was written what the monetary value of damages would be in the event of breach of contract by one of the parties. If the property is 1-4 units, Civil Code 1675 limits the damages to 3% of the purchase price unless there is a judicial or arbitration decision.

Many buyers do not realize that they can have their own agent represent them in a purchase of a new home (even if the builder is not cooperating~i.e not paying a commission) & that their own agent would be an asset in helping them through the whole process.

Congratulations on your new home it is a great time to buy!
0 votes Thank Flag Link Wed Nov 20, 2013
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