Jul 17, 2023
Buying a new home is an exciting venture, but it also comes with its fair share of challenges. One crucial aspect of purchasing a new home is reviewing the builder’s contract. These contracts, which are typically drafted in favor of the builder, outline your rights and obligations as a buyer. It is essential to understand the terms and conditions of the contract before committing to the purchase. In this blog post, we will explore the significance of reviewing new home builder contracts and highlight key clauses of concern. With the help of experienced real estate lawyers at Passgo, you can make an informed decision and protect your interests.
When purchasing a new home, it’s crucial to review the builder contract as it determines your legal rights and obligations. These contracts are generally biased towards the builder, and it’s essential to understand their implications fully. Reviewing the contract allows you to evaluate the associated costs and risks, enabling you to make an informed choice. At Passgo, our team of real estate lawyers in Calgary and Edmonton understands the importance of reviewing new homebuilder contracts. We help you navigate the complexities of these agreements, ensuring you are aware of all the details and implications.
While many aspects of new build home contracts are similar to new build condominium contracts, there are significant differences. Reviewing the contract with your lawyer ensures that you are well informed about the specific terms and conditions that apply to your purchase, be it a home or a condominium. Understanding these differences will help you avoid any surprises throughout the home-buying process.
When reviewing new home builder contracts, it is crucial to pay close attention to several key terms and clauses that can significantly impact your rights and obligations. Although each builder and project contract may differ, the following terms are commonly encountered and warrant careful consideration:
Buyers should be aware that builders often impose high-interest rates in case of payment delays, ranging from 15% to 26% per day on the full purchase price until payment is made in full. Understanding the implications of these rates is essential to avoid unnecessary financial burdens.
Should you fail to fulfill your contractual obligations and the builder initiates legal action, you may be held responsible for covering the builder’s actual legal fees in addition to court costs. This clause emphasizes the importance of meeting your obligations and avoiding potential litigation.
It is common for builder contracts to absolve the builder of liability for construction delays. As a result, buyers are left to bear the financial consequences of these delays, such as additional accommodation costs, storage fees, or the risk of losing their mortgage qualification. Understanding the implications of this clause is vital to properly manage potential delays.
Unlike contracts with real estate agents, builder contracts often require buyers to provide proper notice if they decide to withdraw from the purchase within the condition period. Failure to adhere to the notice requirements may result in the forfeiture of your deposit. This clause highlights the importance of carefully considering your decision within the specified timeframe.
Certain builder contracts may include clauses that allow the builder to cancel the agreement without penalty under specific circumstances, such as cost increases, financing challenges, or changes in construction conditions. Understanding the conditions under which the builder can terminate the contract is crucial to protecting your interests.
Builders often retain the unilateral right to make design or layout changes to your home, which may not align with your original preferences or expectations. Being aware of this clause allows you to assess the potential impact on your vision for the new home.
Builder contracts frequently impose restrictions on the timeline for making decisions about customization options, such as choosing colors or finishes. These limitations can restrict your ability to personalize your new home according to your preferences. Understanding these restrictions is important for planning and decision-making purposes.
In addition to analyzing the included terms, it is equally crucial to identify any missing obligations of the builder during the review of new home builder contracts. Our lawyers diligently assess the contract to highlight any overlooked builder obligations that may impact you and your new home. This comprehensive approach ensures you have a complete understanding of the contract’s implications. Engaging the services of a real estate lawyer for reviewing new homebuilder contracts is highly recommended. Lawyers possess the experience and expertise necessary to decipher complex legal language and evaluate the impact of various contract terms on your rights and obligations. They can help you navigate potential risks and negotiate more favorable terms when feasible. Leveraging their in-depth knowledge of the legal intricacies associated with these contracts, you gain clarity and protection throughout the home-buying process.
Unlike standardized contracts used by real estate agents, new home builder contracts exhibit significant variations in length and content. At Passgo, we prioritize transparent and reasonable flat-rate fees for reviewing these contracts. Depending on the contract’s length, our fees typically range from $325 to $525. This inclusive fee encompasses a comprehensive review of the contract, a 30-minute consultation to discuss its details with you, and email support for any subsequent questions you may have.
While it may be tempting to seek quick answers to bypass legal fees, addressing specific questions about new home builder contracts over the phone can be misleading and insufficient. Each builder contract possesses its unique characteristics, and the details matter significantly. Without a thorough review, providing accurate information about your rights and obligations is impossible. The expertise of a real estate lawyer in Passgo is invaluable in comprehending the contract’s nuances and ensuring you possess a clear understanding of your risks and obligations.
A comprehensive review of new home builder contracts is an essential step in safeguarding your interests and making informed decisions throughout the home-buying process. These contracts often lean in favor of the builder, emphasizing the need to seek legal assistance from experienced real estate lawyers. At Passgo, we provide comprehensive contract reviews that illuminate key terms, potential risks, and any omitted builder obligations. Our objective is to empower you with a thorough understanding of the contract’s implications, enabling you to confidently navigate your new home purchase. Don’t underestimate the significance of contract review—gain peace of mind and protect your investment by consulting with a real estate lawyer today.
Hi! I’m Erin Crocker. I’m a real estate lawyer with over 10 years of experience in Alberta and British Columbia real estate law. I love technology and efficiency. I’m on a mission to create a modern, digital closing experience for buyers and sellers through technology, transparency and sharing knowledge.
