I will be glad to find out if you need help on this issue.
It is my experience that many standard Builder's contracts contains a clause whereby you agree to switch to a "comparable" lot for circumstances just like this.
But without your contract or your agent, that's as much of a guess as any of us can take towards solving your issue. I am sorry it's arisen.
I have worked for 15 years in new construction sales. It would help me if I knew which builder and community. However, if the homesite is a sloped homesite this could cause the issue or, the builder could also be required to add some additional cost to the lot that they don't want to do, ie stem walls etc. Again if if knew which city, I could check on the permit for you.
Now if they are offering to do a basement, I would ask them if they will do the basement at their cost. You may want to consider this as it will add value to your home if you complete it one day in the future. Basement homes aren't as popular here as they are in up North.
If there is another homesite to choose, I would ask them for some additional choices, options, sideload garage, closing costs or something that you want to be added to the contract for your inconvenience. Most new construction does the homework in advance of permitting so things don't get denied.
Third option is to cancel the contract and get a full refund. If you would like my assistance I would be happy to assist you, it's important to have buyer representation on any transaction especially new construction as their sales agents rempresent the builder only.
If you have any questions, please feel free to contact me.
Best of luck with it!
Most likely, when the builder submitted his initial plan this basement was not a requirement. Now that things have changed and the basement is required, probably due to increased concern about storm water, a common ground must be reached.
Perhaps the builder will meet you half way with the expenses to build the basement. Ask the builder to detail out the exact cost that it will take to complete the basement.
Once you know the amount it will cost try to negotiate with the builder. If it is just too much then you may have to cancel.
You can contact an attorney to determine if the contract can force him to build the house on that lot, since he is attempting to alter the original agreed upon terms, or if he does break it, are there any penalties to him.
Did you use a agent to represent you in purchasing, or did you use the onsite agent of the builders?