Custom Home Builders
Ask the Real Estate Lawyer: Real Estate Law Q&A
REM # LAW 773
By Ilyce R. Glink and Samuel J. Tamkin
Summary: Custom home builders all use different contracts which govern the terms of the deal. This ThinkGlink reader needs to read his contract and then decide if he owes the builder additional money.
Q: I hired a builder to build a custom home. We had ordered some upgrades and
two weeks prior to closing I asked the builder for the final price of the home
to secure financing. He gave me the number and said we would be fine.
So we closed with that purchase price. Two weeks later, he said some more bills had come in and that we owe him an additional $14,000. Is this my responsibility or is he out of luck because we have already closed?
A: There are multiple variables that would determine whether you owe the builder the amount he now claims. If the builder made an honest mistake and you recognize that he made this mistake, it would seem unfair to deprive him of the money he is owed.
However, your purchase contract should govern the transaction. Some contracts have language in them that would permit the parties to revisit an error like the one you are describing. If the contract has no such language, the builder may be out of luck. The price he set at closing would be the price for the sale.
First, you need to determine whether the builder is right about the numbers and whether he may be entitled to reimbursement. If you think he is, you should sit down, read over the contract, then talk to a real estate attorney and then decide whether you will use the terms of the contract to shield yourself from paying the builder.
If you clearly recognize that the builder is owed the money, you might decide
to pay him anyway. It would be a good faith gesture and in so doing you might
be able to get the builder to extend the warranty on the home or get something
else in return.
Samuel J. Tamkin is a Chicago-based real estate attorney. Ilyce R. Glink’s latest book is 50 Simple Steps You Can Take To Sell Your Home Faster and For More Money In Any Market. If you have questions for them, write: Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022 or contact them through Ilyce’s website www.thinkglink.com
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