Q: We signed an agreement to buy a piece of land to build a house for our elderly mother.

At the time of the scheduled closing, we were both out of town on business and therefore signed a Grant of Authority for Closing Documents for the builder to sign on our behalf. On the day of the closing, the title company called to tell us that the lot number on the contract we signed was incorrect. Standing in an out-of-town airport ready to board a plane, we told them not to close since we could not determine correct lot number.

The title company has since wired our closing money back to us, but the builder is claiming that we have to purchase the lot and the home.

We have discovered additional, serious several mistakes that the builder has made over the past few weeks, and with the dispute over which lot is being purchased, we have lost all confidence in the builder.

What are our options?

A: You made a big mistake by giving the builder the right to sign documents on your behalf. This is simply something no one should ever do.

You should have either postponed the closing until you were back in town, or had a friend, family member, or attorney that you hired be there for you. But you should use someone who is not familiar with your deal only as a very last resort, and you should never grant this authority to someone from whom you are purchasing property.

Just think what would have happened if the builder had closed on your purchase of the home with the grant of authority you had given. As a general rule, if you are buying real estate, never grant a seller any power of attorney or otherwise rely on the seller to perform any action on your behalf during the acquisition process.

Going to your primary question, if your contract states that you are buying lot “X” but the builder claims that it made a mistake and that the contract should have stated that you were buying lot “Y” that mistake could potentially cause the contract to be void.

If you can prove that the builder knew that lot “X” was the lot they were selling to you and it wasn’t until the closing that they “decided” or realized that they made a mistake, you may be able to sue the builder and force them to sell you lot “X”.

Whether you want to pursue litigation or not is a different issue, you must first determine what lot they are offering you. If it is inferior to the one you had contracted to purchase, and they are unwilling to reduce the price or compensate you for their mistake, you might want to kill the deal and get your money back.

In some cases and in hot markets, builders’ employees fill in contracts and they can make a mistake at that time. But if they made a mistake, you should be entitled to a reduction in the purchase price or a cancellation of the contract and a refund of the money you paid.

If the seller is not responsive to your demands, you should contact a real estate attorney to assist you.

Published: Nov 29, 2006