Developer Misleads Buyers

Q: My husband and I signed a contract to build a house in May, 2004. We specifically told the developer that we wanted to build on the last lot of the street because we didn't want a house next to us.
 

He agreed and said that we were going to be the last house on the street because the lot next to us could not be built upon due to power lines that cross over the lot and the fact that the lot is so steep.

Unfortunately, this agreement between us in not in writing and was not attached to the contract.

Two weeks ago I noticed a "Lot for Sale" sign right next to our house. The builder who is constructing our home tells us the developer cannot build a house on that lot because it is to close to the power lines and easements. The developer says he can. We called the city and they told us that the developer was right and that it is a marketable lot.

We have two issues: First, we were supposed to be the last house on that street and now we are not going to be. Second, the house should have been finished last November. We have already closed on our current home but our new house isn’t supposed to be ready until well into 2005.

Should we pay to buy the lot? The developer said he will sell it to us for $15,000 instead of the $40,000 that lots usually go for. And, if we can’t come to an agreement, can we get out of the contract?

A: It may be tough to hear, but you should have gotten your agreement with the developer in writing and attached it as a condition of your contract. Conditions that are specific to a real estate contract are generally not enforceable unless they are in writing, so the fact that you both spoke about this and had a meeting of the minds won’t protect you now.

You should have also placed the call to the city to find out whether the land was buildable to begin with – not made that your last move.

The good news is you have a fairly-priced remedy. Spend the $15,000 for the lot. You might never regret purchasing it, but could be very sorry if you don’t The developer knows he will have a tough time selling that lot and house, and is looking for a little extra cash. (Who can blame him? He’s in business to make money.)

True, the developer lied to you. You, on the other hand, should have gotten his promise to be the last house on the block and not to build on the lot in writing. Since you didn't, you can't hold the developer to his word.

Good luck with your house. I hope you can come to an agreement with the developer and move on from here.

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