Expert: Karyn Foley - 3/18/2008

Question
Hi Karen,

My wife and I signed a purchase agreement on Oct 30, 2007 for a house under construction, with a 90 day closing agreement, but a verbal agreement to be in just after the 1st of the year.  The builder is still not done as of Mar 17,08, has/will not given us a date, and every time I pressured him to he would say " oh about 2 more weeks" well after hearing this for the last 3 mos, we started to get discouraged.  We found a nicer house last week for the same price, and it's ready to be sold.  We jumped on it and signed a purchase agreement, and put down 2000 earnest money.  I called the original builder and told him I was sorry but we are sick of waiting, and watching other houses hit the market, and that we found another house, and that I expected my earnest money back.  His response was "sorry, you forfeit that money, it was there for a reason".  If he had held up his end of the deal we would be living there right now, I feel entitled to get my earnest money back, and am considering trying to get back the money we paid for the appraisal also($750).  I feel we have been more than patient, and he is 11/2 mos late on our written agreement.  Are we being unreasonable?  We live in rural Alaska, and are doing this deal without an agent, which is the way all real estate deals are done around here. Thanks for your advice.  My e-mail is akfonks@hotmail.com

Thanks,

Jeff

Answer
Dear Jeff:
 I amresponding to you via the All Experts network.  As I do not have a copy of your contract, I can only offer an off the cuff reply.
 First of all, all agreements with reference to real estate must be in writing; your verbal conversations are not in writing thus you may have a problem having them upheld.  
 It may have been too hasty a decision to purchase a second home before you reconciled with the builder of your original purchase.  Now, you are under contract to buy two houses.  Deposits are there to ensure that the buyer completes the transaction and to go to the seller (builder) in the event the buyer changes his mind.  That is called default.  However, the builder has an obligation to put the house immediately on the market, and you may see that the house sells quickly and that the builder is not damaged financially because the new buyer could pay more.  But, in this buyer's market that is not a likely scenario. Since I am not able to "practice law without a license" I cannot tell you the odds of you prevailing.  It is worth at least one visit to an attorney to explore all your options and give you explicit advice and directions on how to proceed.  
 I am not surprised that the home is not yet completed.  It is only an estimate as to when a builder can finish his product.  There are always time delays because of shortages of material, labor interference like strikes or slowdowns or hard to find specialists, plus bad winter weather when construction cannot safely take place.  Local city and/or county juresdictions can also cause delays in the event a permit or certificate of occupancy is delayed because of city hall personnel or additional implementation is required to make code reuirements.
 You truly need an advocate, so please get one soon so you can have peace of mind and do the best you can do under the circumstances.
 Good luck to you, Karyn Foley