Attorney Review and Refund of Deposit

[Tactical1]

We signed a contract (with an attorney review contingency) with a builder to buy a home for which the foundation had been laid. During the attorney review, we asked for a home sale contingency. The builder balked saying he would lose too much money holding a completed house. When we added the home sale contingency in the contract anyway, the builder replied verbally that he would be open to it if he approved the choices we were making for the house. Four weeks later, in the absence of a written response to our home sale contingency request, we asked to contract to be null and void, and our downpayment to be refunded in full.

The builder responded via e-mail, and later through his attorney, to return to negotiations. We declined and reiterated our request for a refund of the downpayment. He claimed he installed items he would never put in a spec home, and could not refund the money. Four more weeks passed without their replying to our correspondence. The builder then claimed through his attorney that they considered the attorney review to be closed claiming my wife allegedly told him during a conversation at an unspecified time that we were committed to the house, and therefore, the contract was in force.

We reviewed all our electronic correspondence to refute this unfounded claim, and it is evident that he never considered the contract to be finalized, since he and we were obviously negotiating the terms of the contract.

The contract has a clause that awards attorney fees to the winner of the case in litigation. We are faced with not recovering a very large deposit made on a line of credit, and the possible added burden of paying the builder's legal fees if we should file and lose the suit. Is there any loophole that might give the builder claim to any of our downpayment were we to go to court?

 

[Michael Wechsler]

We signed a contract (with an attorney review contingency) with a builder to buy a home for which the foundation had been laid. During the attorney review, we asked for a home sale contingency. The builder balked saying he would lose too much money holding a completed house. When we added the home sale contingency in the contract anyway, the builder replied verbally that he would be open to it if he approved the choices we were making for the house. Four weeks later, in the absence of a written response to our home sale contingency request, we asked to contract to be null and void, and our downpayment to be refunded in full.

The builder responded via e-mail, and later through his attorney, to return to negotiations. We declined and reiterated our request for a refund of the downpayment. He claimed he installed items he would never put in a spec home, and could not refund the money. Four more weeks passed without their replying to our correspondence. The builder then claimed through his attorney that they considered the attorney review to be closed claiming my wife allegedly told him during a conversation at an unspecified time that we were committed to the house, and therefore, the contract was in force.

We reviewed all our electronic correspondence to refute this unfounded claim, and it is evident that he never considered the contract to be finalized, since he and we were obviously negotiating the terms of the contract.

The contract has a clause that awards attorney fees to the winner of the case in litigation. We are faced with not recovering a very large deposit made on a line of credit, and the possible added burden of paying the builder's legal fees if we should file and lose the suit. Is there any loophole that might give the builder claim to any of our downpayment were we to go to court?

To begin, your answer is most likely found in the words in your contract, which we don't have.

1) What does the attorney contingency provision state?
2) It seems you counteroffered with the contingency provision for the home -- did the builder agree and sign?
3) Is what the builder saying true that he built something specific just for you and, second, did you know he was going to do this?

I'm curious, what does your attorney think? He's the one closest to this situation.

 

[Tactical1]

Thank you for responding.

1. The attorney review period was on the initial contract specified a response within five days. We responded early with a counteroffer, which they accepted, to keep the attorney review open until agreement had been reached by both sides.

2. Counteroffers from both sides regarding various minor items, e.g., the number of paint colors allowed, continued without agreement being reached. We counteroffered with a home sale contingency during this process. The builder never signed or returned our this, our final, counteroffer. The only communication from him was verbal, that he would be open to the home sale contingency as long as he "approved" the choices we were making. It was during the four weeks we were waiting for his reply that we asked to nullify and void the contract due to an inability to reach an agreement.

3. Yes and yes. During the initial meeting, we had asked him to include the finishing of the basement, which he included in the original contract and quote. He normally doesn't finish basements on his homes.

Aside from this, the only modification we made to the original plans was minor change in moving a builder agreed this was a much better layout and quoted us $150 for this work order (per the original contract we were allowed 4 work orders without charge.) The house was still roughed in and two weeks away from drywalling when we asked to kill the deal. Construction had begun prior to our even meeting the builder and continued even as we were negotiating. From having worked with his subcontractors, we know that the builder took their recommendations to deviate from the architect's original specs (before he even had buyers.)

Our attorney thinks we have a strong case, but says there are no guarantees in court. He thought it was the builder's prerogative to continue work without first finalizing the contract and consequently has no claim. He thought their claim that attorney approval process was closed is unfounded.

 

[seniorjudge]

It all comes down to money.

You have to remember that a BUYER in a real estate deal that goes sour is really not in a very good position when it comes to a lawsuit like you are contemplating.

The reason is that the most that some courts would say you have been damaged is the loss of your deposit.

It's up to you to decide if you want to take these chances and whether it is worth your time and money.