Home Buying in 94582>Question Details

Ck, Home Buyer in San Ramon, CA

Getting Back A Down Payment

Asked by Ck, San Ramon, CA Fri Oct 19, 2007

Is there any way to get back your deposit money from a builder on a new construction contract that you back out of at the last moment? (the paperwork they make you sign when you enter the contract says that you lose it, but just wondering if I could get it back -- the amount I'd be losing is 30K)


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Oh, Ck! I worry that you didn't use a real estate attorney before you got yourself into this contract. Did you at least use a Realtor? If so, she can give you some referrals.

If not, Californians RE Pros, any good recommendations for Ck? We're talking $30K here!

Take care.
1 vote Thank Flag Link Mon Oct 22, 2007
how do I find a good real estate attorney? any recommendations?
1 vote Thank Flag Link Fri Oct 19, 2007
Hello Ck,

I have dealt with several situations as yours. In most cases, the builder does not want your money, they really just want to unload their inventory. The were counting on the sale of your home so as to meet their "Numbers!" If you know someone who you can put in place to possibly purchase the home, I have seen the builders refund the money. For instance, I once was buying an investment property from a builder and and I had put down 20K which went hard, I was in the middle of a 1031 and there were some complications, I did not close on time and they basically took my earnest money. Luckily this was a great deal and I was able to find someone to purchase the builders home, cash within 10 days, I used this person as leverage to get my 20K back. I would look at how much money went possibly towards custom options and how much was just a plain earnest deposit, many times when you put in custom options, it may be more difficult to sell the property thus making it more difficult to get your money back. In some cases I have had clients purchase another home from the same builder at another location and or another time frame, in some of those cases, the builder has given my clients a credit for the earnest money towards their purchase. Do consult with an attorney, however trying to negotiate on your own may be the first step.

Good Luck,
Ken Herrera
Century 21 Infinity
1 vote Thank Flag Link Fri Oct 19, 2007
Your best shot is to retain an attorney who handles residential real estate. The attorney will read your contract to determine if there is any way to obtain a refund. In the market today, contractors don't build homes until they have a buyer. Many buyers don't know that they can use a realtor or attorney to negotiate the contract before they sign a builder's contract and pay the deposit. For realtors, their commission is already included in the builder's costs. If a buyer does not use a realtor to represent them, the commission goes to the sales agent.
0 votes Thank Flag Link Mon May 28, 2012
Have to keep on asking the seller or you'll won't get anything back. I don't think they are obligated the refund.
0 votes Thank Flag Link Mon May 28, 2012
Follow up question to the answer on getting my payment back on an empty piece of land;

The contract was only to purchase a piece of land as an investment and no construction was to take place; I was only buying a piece of empty land that I may have sold in years to come. I felt that putting money into land would yield much more money than just sitting it in the bank.

Carlotta M Brown
0 votes Thank Flag Link Wed Apr 11, 2012
I put down $30,000 on a piece of land. My lawyer and I found out after the contract was signed that the neighbor to this piece of land went over or encroached 3.3 feet on to the land that I wanted to purchase. We asked back for the $30,000 but weren't successful.
Carlotta M Brown
0 votes Thank Flag Link Wed Apr 11, 2012
Hi, CK
I am in the same situation... my deposit is $26,000 -san ramon builder... did you get your money back from the builder finally?
0 votes Thank Flag Link Wed Nov 26, 2008
If the contract provides for active removal of your contingencies (contingencies removed in writing) there may be hope. If you used their loan officer and lender and rates went nuts or the loan was no longer available after you removed your contingency you may have a chance because of the possible conflict of interest, you may have a chance also. If the deposit pays for upgrades it may be a challenge. Most builders don't want bad press, especially now, but they are a bit desperate.

The first step is to be very vocal. Check the Better Business Bureau, State Contractors License Board, Chamber of Commerce. See if there is anything negative in their records. You might also check with the appropriate building department to make sure that all the appropriate permits are current and accurate. Then send a strongly worded letter (or have your attorney do so) referencing all these sites as where you will be registering your complaint.
0 votes Thank Flag Link Sun Nov 2, 2008
Hello Ck. I was wondering how your situation turned out. I have the same situation and would appreciate any advise. By the way, I am on the hook for 42k. Thank You.
0 votes Thank Flag Link Sun Nov 2, 2008
It will depend on the builder and the situation. Depending on where they are in the building process, you may legitimately cause them to lose 30K or more by deciding to back out at this time (especially if the home is already built) However, it would be really bad publicity for a builder to take 30K from you. The local news and the local newspapers would eat up a story like this - especially now. Not to mention you have every forum on the Internet to tell your story and have the word "stinks" appear next to the builders name. You could cost them way more than 30K in business and a ton of headaches. Now, I'm not suggesting that you actually do this. But, you could let on that you might if you don't get your money back. Absolutely talk to an attorney before you do *anything* - don't get yourself in trouble. Cool heads will prevail, just find a good argument for your position and keep going up the chain of command until you talk to the right person. Be persistent, be nice, but be firm. Like Lynn's example, many builders will be more than forgiving.
0 votes Thank Flag Link Fri Oct 26, 2007
My daughter got her down payment back! They had already installed the upgrades she had picked! She decided at the last minute that the payment was more then she could handle. She went to the top in management and finally found someone who cared enough to listen and not pass the buck. She also threatened to ruin their reputation within the community, that probably helped, if they didn't refund her money. It took awhile but she got every penny back. Good Luck! Lynn Zontini "The Betancourt Group"
0 votes Thank Flag Link Fri Oct 26, 2007
No easy answer to this one. It will very much depend on how reasonable the builder is prepared to be. One factor may be the reason you have for backing out. If it is because of financial reasons (say losing your job) you may have a better chance than if you simply changed your mind. You really need to open a dialogue with somebody at the builders. First of all, read your contract carefully though. If this doesn't help, talk to areal estate attorney. $30K is a lot of money!
0 votes Thank Flag Link Fri Oct 19, 2007
Hi CK,

That's an awful lot of money to forfeit. It's hard to say without knowing the specifics of the contract you signed, nor the specifics of your situation. In most cases builder contracts heavily heavily favor and protect the builder (which I always advise clients to read with a fine-tooth comb and to have an attorney review before signing), but depending upon what happened, it may or may not be possible to get your deposit back.

Sorry, it does sound like you need legal advice.

Best of luck to you!
0 votes Thank Flag Link Fri Oct 19, 2007
Yikes. I'd call a real estate lawyer with that question.
0 votes Thank Flag Link Fri Oct 19, 2007
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