Software
Houzz Logo Print
hzdeleted_3735573

Suspicious contractor

7 years ago

hey guys... here is my situation. there is a neighborhood that is preparing to open a third and final phase (not custom homes, you pick from floor plans they have). they do not have lots cleared for this phase but there is already demand (3 or 4 lots reserved). we were offered to keep the floor plan price of what the last phase was if we got in early (saving us $10k). however, we have it written in our inital contract that this is contingent on us approving the final plat, if we do not like the plat we can void the contract and we get all our deposits back.so we reserved the lot and went through the whole design process now have already pick out and paid 2% of base price and 45% of all of our non-standard upgrades and lot premium... mind you roads and plants not to be ready for another 6 months they sent this pricing addendum for the design choices/upgrades. at the bottom its states something to the effect that this contract supercedes all written and verbal agreements prior to it... now we are stepping back and wondering should we back out now? we have pretty much taken on all the risk as they have about 20k of ours..we have already commented that we will not sign until we get something in writing saying it is still all contingent on us approving the legal plat when it is ready. they have made it seem that they have done us a favor by letting us do all the design process now and giving us an out without any kind of loss but then we see this verbiage and have come to a screeching halt. should we wait to sign until we accept legal plat? run away now?

Comments (13)

  • 7 years ago

    I never thought I would need a lawyer.. at that point it is not even work the 10k in savings, right?

  • 7 years ago

    A lawyer is always helpful when it comes to protecting your interests in something as large and consequential as a real estate transaction.

  • 7 years ago

    This legal phrase is very common people throw it everywhere, it does not necessary mean that individual or a company is trying to defraud you. Tell the other side that you are not agreeing with the contract modification statement except price, materials or whatever.. If you send a check cross the language stating: accept price/materials change, however the contract @8/1/2019 supersedes the amended with exception of [], write the same on the check and the attached letter. Inform the other side on the phone stating I am sure it is still ok ... but you are not agreeing to the amended contract, and it will be stated on the check and in the letter.


    99.999% this is ok.

  • 7 years ago
    last modified: 7 years ago

    You're spending 6 figures of your hard earned money. You absolutely should have a lawyer look over your contract and advise you of what works.

    Every single contract with a builder always favors the builder.

    Be willing to spend a few hundred dollars for peace of mind when you're laying out hundred's of thousands of dollars. As my Mom used to say, "don't be penny wise and pound foolish."

  • PRO
    7 years ago

    It is typical for a contract to disclaim any prior agreements, verbal offers, etc. That's standard language not something written specifically for your situation.

    If the builder/developer's offer to allow you to approve or reject the contract based on the final site development plan is sincere, they should have no issue including language to that effect in the final version of the contract.

    Alternatively, you can simply wait to approve the contract until the site development plan is available and include it as a contract document along with the plans and specifications for the home.

    Builder/developers and their commercial lenders have a strong preference for building "pre-sold" homes versus homes built on speculation. What you're asking for is reasonable. They should work to accommodate your request.

  • 7 years ago
    last modified: 7 years ago

    It doesn’t bode well for the project that you are accusing and suspicious of the contractor over a standard legal boilerplate. You already should have your own lawyer look over things, but you seem to need that more than others, just because of your lack of trust. Keep them available through the build as well as for that initial consult.


    Id also suggest hiring a neutral third party or parties to work with you through the project. That could be a third part Construction inspector, or an experienced designer to help with the thousands of decisions that you will face. Or both. Your lack of trust in the situation is going to make you miserable without a lot more hand holding. That’s not in a contractor’s wheelhouse of services.

  • 7 years ago

    "I never thought I would need a lawyer."

    Now you know why people consult a lawyer before signing a contract for a great deal of money. By hiring one now, you will have him/her available to you for future issues for which you might have not have had legal advice.

    Do you have a will yet?

  • 7 years ago

    Thank you for most of your replies. Some seem a bit rude but I find that is typical on this site. I will look into getting a lawyer to review. Not everyone deals with legal matters every day or hardly ever for that matter so when one says your "typical legal boiler plate" typical to who? We have never built a house. I don't require hand holding considering we already went through the design process as stated above.

  • 7 years ago

    Typical to people who read contracts. The most expensive lawyers in my area, for something like this, go for something like $500-600 per hour (this won't apply if your in SF or NY), and you could get someone perfectly capable for closer to $250-300. So a consult/contract review won't come close to eating up your $10k. But if you feel like you have a good handle on the contract and what's supposed to be in there, you're probably fine to go back to the company directly and explain that your new contract is missing terms that need to be in there.

  • 7 years ago

    You should not make it personal; the terms are typical for contracts in general because if a later contract did not superseded previous contracts it might be impossible to interpret or enforce and could hurt either party.

    Contracts are signed by two parties therefore they are negotiable. You use a lawyer to tell you when its necessary to ask for changes and when its not. Never assume a seller is acting in your interests or that they are not. Ask someone who knows.

  • 7 years ago

    > "typical legal boiler plate" typical to who ?


    Typical in any business, not just homebuilding for a contract to disclaim any prior agreements, verbal, or otherwise, etc. The standard legal clause nothing unusual:

    - This contract supersedes all written and verbal agreements prior to it

    - Time is of the essence

    -...


    I had years ago apartment complex gave me to fill-in the notice of termination [landlord tenant], to be submitted with a final check, the notice was modifying the contract. Signing that notice as is would have costed me $1700+ extra vs the contract; a windfall for apartment management company because the rules were changed about early termination.


    I crossed, sent the final check with the clause denying the contract modification, stating that the original contract will be inplace. Shockingly got contacted later by the debt collection agency attempting to extort based on the contract modification that I denied and they cashed the check. - LOL. The debt collector was trying to tell me that the rule is implicit, NOT in MY STATE when there is the written contract [the instrument].


    Emailed him few papers and that was the last time I talked to him. You CAN deny the contract modification clause. I have done this 10 - 12 times. 99.99999% other party can understand and will agree. Not going to hire an attorney every time I get one of those. If you are building a house you going to get one of those every time you upgraded, had the builder do something extra, had extra expenses based on the site condition ... etc etc etc. Get used to it.


    If you are acting as a GC, I issued all the contracts [simple form] not the subs, because of insurance rules.

  • 7 years ago

    As already mentioned, this is “boiler plate” language and will be found in many contracts of various types.


    The key here is that you are signing an addendum with the purpose to change price relative to the original purchase contract based on upgrades. An addendum is usually simple, one page additions, and do not re-visit the whole contract in it’s entirety, just specifics in a section of a contract.


    Check your original “full” contract, you likely also have a severability clause, which states the original contract remains enforceable, even if a particular section becomes void. This means you don’t usually “throw out the whole contract” with an addendum, only the specific areas addressed by the addendum. So, in your instance, price is being thrown out and overridden by the addendum because you have made material changes affecting it.


    If it makes you feel better, ask for a statement on the price change addendum to reflect continued need for approval for the plat and your ability to keep the out based on it. Since the roads are not in, the builder is not at a point of being able to provide this, so patience is needed on all sides. I can’t imagine a builder would have a problem with this if they originally agreed to it anyway. Expect once the builder starts absorbing sunk costs, permits, purchasing the lot, shovel hits the ground, that your "outs" in the contract will dry up, as that point in time you will not be taking "all the risk" as mentioned.