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Old 2010-09-16, 01:32 PM
sp72 sp72 is offline
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Default conditions in contracts with builders

We are currently in the process of working through a contract with a builder. Our lawyer has strongly suggested we include a conditional clause that we sell our house. I understand that this is common when buying a resale house but we are building and therefore it seems odd to me - I assumed that we assume the risk when building not the builder when it comes to this. Since the house won't be completed until May, and we weren't even going to consider selling until after Christmas then I believe it would put the whole process off until we sell and push the closing date to the fall would it not? I am wondering what is the reasonable, and common thing to do in this situation...

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Old 2010-09-16, 01:47 PM
mj3tots mj3tots is offline
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Originally Posted by sp72 View Post
We are currently in the process of working through a contract with a builder. Our lawyer has strongly suggested we include a conditional clause that we sell our house. I understand that this is common when buying a resale house but we are building and therefore it seems odd to me - I assumed that we assume the risk when building not the builder when it comes to this. Since the house won't be completed until May, and we weren't even going to consider selling until after Christmas then I believe it would put the whole process off until we sell and push the closing date to the fall would it not? I am wondering what is the reasonable, and common thing to do in this situation...

Thanks!

The builder must be really desperate to allow such condition in the contract. 99% of them will not allow this. Financing, lawyer's review, yes all within a couple of days. Not continuing to build your house and then you come back like a year after to say your house did not sell so you won't close.
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Old 2010-09-16, 02:24 PM
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gerapau gerapau is offline
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I guess your lawyer hasn't done a lot of new home purchases have they? The builder will never agree to this.
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Old 2010-09-16, 02:25 PM
Wings Wings is offline
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Can't see the builder agreeing to that either... I've heard of them doing it before, but they didn't start building until the house was sold. I can't see any builder starting the house without the buyer having sold their house first. They may tell you that you need to sell your house by a certain date or your closing date will be pushed back.
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Old 2010-09-16, 02:46 PM
PJD PJD is offline
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I guess your lawyer hasn't done a lot of new home purchases have they? The builder will never agree to this.
+1. Your builder will never agree to this.
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Old 2010-09-16, 02:52 PM
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GVC76 GVC76 is offline
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Agreed.... that is the risk the homeowner has to take... but with bridge loan, no worries...

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I guess your lawyer hasn't done a lot of new home purchases have they? The builder will never agree to this.
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Old 2010-09-16, 03:12 PM
Fraser Fields - Lot 22 Fraser Fields - Lot 22 is offline
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The closest thing I've seen is where a builder will 'hold' a lot for you pending the sale of your home. I reality though, if someone else makes an offer on the lot, they'll give you the option to firm up or let the lot go.

No builder will allow you to design your house and have it built with a condition on the sale.
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Old 2010-09-16, 03:46 PM
Fingers Fingers is offline
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Even if you have a firm sale, the buyer's financing can fall through regardless, and they end up backing out. Sure you can sue them, but it can be more trouble than its worth. Their deposit goes into escrow and you have to go through a legal process to get at the money.

All that to say -- there could be many many unanticipated outcomes. Be prepared for any eventuality. I ended up getting bridge financing to support three properties simultaneously while I shuffled my belongings around.
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Old 2010-09-16, 03:48 PM
eldender eldender is offline
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I don't think they'd do it either! Like Fingers suggested, that's what Bridge financing is for!
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Old 2010-09-16, 05:42 PM
Cosmogrrl Cosmogrrl is offline
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This is soooo bizarre. I was having this EXACT conversation with my manager today in Montreal. He has bought a new build here, and his new home agreement had a clause based on the condition he sells his current house. So essentially he has had a "Hold" on a lot (for $10k) since spring. He finally put up his house for sale and sold it this week.
BUT, the agent he used ended up representing him as a seller (current house) and as a buyer (new house).
All in all, I've never heard of a builder allowing this - I told him how surprised I was that he was allowed to do it!
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