Home Buying in 78704>Question Details

369calendario, Home Buyer in Austin, TX

How can we get our earnest money back from the builder?We had to cancel the contract on new home. Its NOT

Asked by 369calendario, Austin, TX Fri Feb 22, 2008

because we are not happy. Its because MEDICAL REASEON. I have all my medical papers. I wont be able to work for some time, so we wont be able to save or do it at this moment.
They havent start building the house yet. Pleaase help me.

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Answers

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You should have an attorney that specializes in real estate look at your contract and see if you have any recourse. Most builders won't want to give you the money back. But it may be possible depending on the contract used. If you need a real estate attorney , please shoot me an email and I will give you some names. I am sorry to hear about your health problem. I wish you a speedy recovery and positive resolution to this issue.
Sincerly,
Betina

Realtor Austin Texas
http://www.ActiveRain.com
1 vote Thank Flag Link Mon Oct 13, 2008
I think you should discuss your problem with an attorney and let him help you. Hopefully something can be worked out.
Web Reference: http://AustinHomeSafari.com
1 vote Thank Flag Link Fri Jul 25, 2008
I'm a lawyer and Realtor in 78704. Sorry to hear about your health problems. I do pro bono work, and will give you a free consultation. There's probably something that can be done. But to make good use of my time you'll need to bring in your paperwork so we can go over in face to face. Call me for an appointment.
1 vote Thank Flag Link Sun Feb 24, 2008
Real estate agents are generally not qualified to give legal advice, so I suggest that you consult with an attorney if you cannot persuade the builder to release you from your contract. Unless you truly cannot qualify for the loan, any suggestion that you seek to fail to qualify for the loan would likely not work to your advantage if you were able to manipulate your finances in order to accomplish that end.
1 vote Thank Flag Link Sat Feb 23, 2008
Home buyer in Austin: All of the answers provided below would seem to have merit. Pleading your case with medical documentation at the highest level possible is your best bet.

Here is the problem. Contractors schedule construction on plats based on past sales volumes, timing and projected sales, given the economy. Historically, people are always trying to get out of contracts. You can’t believe the number of reasons or excuses that are given. It is the nature of new construction. It is very difficult for contractors to schedule out construction on a new plat because of commitments that have to made to sub-contractors whose very financial existence may well depend on the general contractors projections or construction start commitments. So, to combat the “I love it today, want out tomorrow” phenomenon, builders have retained attorneys to write iron clad contracts for Ernest money to be sure that a buyer with “bailitis” (or “buyers remorse”) will give up their Ernest money. If you were a contractor, you would as well. They have to have someway to cover the cost associated with failed transactions. In the retail business, we call this a “restocking fee”. Doctor’s call it a “missed appointment fee” and attorney’s may incorporate a “non-refundable clause” into their contracts or retainer fee agreements.

I am from Washington, not Texas, so I am unfamiliar with state regulations pertaining to new construction commitments typically used in new construction. But, this issue is common in every state. My guess is that whatever your reason for bowing out, the contractor could take your earnest money. Your solution thus rests with the hope that your circumstances, once conveyed to the right individual, will prove to be what it takes to release your funds. Throw yourself at the mercy of the court (so to speak).

Now, if your original purchase required the addition of custom items to the home, there is usually a separate contract (or provision) that addresses that issue specifically. Construction supplies are usually ordered far in advance of construction. If THAT was involved in your contract (or is PART of what you have defined as Earnest money), the odds are you will have NO moral or legal ground to stand on to get that money back. Thus, re-securing that portion of your financial commitment may prove impossible regardless of your circumstances or the effectiveness of your appeal.
0 votes Thank Flag Link Fri Jul 25, 2008
You should have an attorney that specializes in real estate look at your contract and see if you have any recourse. Most builders won't want to give you the money back. But it may be possible depending on the contract used. If you need a real estate attorney , please shoot me an email and I will give you some names. I am sorry to hear about your health problem. I wish you a speedy recovery and positive resolution to this issue.
Sincerly,
Betina
0 votes Thank Flag Link Fri Jul 25, 2008
Never under estimate the power of guilt and compassion. Try escalating to the "boss" when and if they say no, then ask for that bosses' boss. And continue until you get to the very top.

I agree with Dee that most likely those evil developers won't give it back. but try, try try....
0 votes Thank Flag Link Tue Jun 3, 2008
Your "best answer" is assuming your agent wrote a contract using the Texas Realtor Forms. Agents always think builders use those forms, but they have their own forms 90% of the time. The TAR release of earnest is assuming you have the right (per the contract) to release the earnest money. In this case, it would have to be in the contract and/or you would have had to use the "Third Party Financing Addendum", which, again, is a Texas Realtor Form. 9 times out of 10, the builder did not let you use this or the time period listed there may have expired already.

To be honest, you usually can't get out of a contract with a builder if it's for medical reasons. Those reasons would have needed to be outlined in the contract itself. I highly doubt it was. Also, builders are not governed by the Texas Real Estate Commission (TREC), which is how agents are governed, so you don't have the same remedies. They are under the Texas Residential Construction Commission (TRCC), so you can call them for info about any builder. http://www.trcc.state.tx.us/default.asp

I wonder if you can get your earnest back due to lack of financing since you may not qualify. You may want to call your lender to get a letter. Again, this would need to be in the contract you signed, but it's worth a shot.
0 votes Thank Flag Link Tue Jun 3, 2008
BEST ANSWER
If you have a Realtor then have them draw up a Release of Earnest Money and a Termination of Contract. Regardless of whether this was put in writting under the builders contract or a TREC contract, both forms will express your intentions clearly. On another note, I have never heard of someone backing out of a contract for medical reasons, so you should try to claim financial troubles! Usually there is a clause that states that you are able to back out and are entitled to you Earnest Money refunded ONLY if you CAN NOT obtain FINANCING, so you would need a denial letter from your lender.
0 votes Thank Flag Link Sat Feb 23, 2008
Most every builder uses their own contracts, so without seeing the contract, it's really not possible to give you a concrete answer. I agree with Bruce, be as honest and upfront as possible. Ask them to help you out. If they refuse, an attorney may be in order to help you interpret the contract. Best of luck to you!
0 votes Thank Flag Link Fri Feb 22, 2008
Go talk to them and explain your situation ASAP. They may or may not give you your deposit back. They may want to apply it to another house in the future. They may be nice though and give it back to you. Especially if they think you might not now qualify for the loan. How long has it been since you signed the contract?
0 votes Thank Flag Link Fri Feb 22, 2008
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
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