Expert: Jessica Bryan - 9/17/2007

Question
I signed a new home purchase agreement in March 2007 for a townhouse being built in a new subdivision. Also gave $1,500 in earnest money. I'm reconsidering my decision to purchase based on several issues and wonder if I am legally obligated to the agreement:
1.  Originally told townhome would be completed approx. August 2007.  Now told 'maybe' November.
2.  I was told I purchased the townhome at a 'pre-construction' price $196,000. The townhomes are now listed at $193,000.
3.  Also agreed to approx. 40K in upgrades.

How legally binding is a new home purchase agreement?  Thanks much  

Answer
Dear Jo Ann;
Based upon the fact that the prices have dropped on the townhomes, and the delay in completion you may have something in your contract that will give you an "out".  However, it is important to read the contract carefully to make sure that there is some verbiage regarding these two issues.  (There often is.)  If there is no mention of delay in closing on the part of the builder, then I suggest you contact an attorney for advice on how to break the contract.   There are several suggestions that can be made including sending a letter as a legal notice of intent to close with time being of the essence.  An attorney will have to advise you however, since as a real estate broker I cannot give legal advice.

In answer to your question about how legally binding the purchase agreement is: any contract is legally binding once both parties sign. However, there are usually contingencies built into the contract that can be used to legally cancel.     I would suspect that you might be able to work with the builder a bit to get the price reduced and/or some upgrades thrown in to the deal if you explain that you a very unhappy about these above mentioned issues and are considering backing out of the deal.  Be nice about it and don't make it contentious.  Simply explain your situation as well as you can perhaps citing some personal concessions you have made or costs incurred due to the delay. Then discuss misrepresentations made leading you to buy early for lower costs.  If the builder is unwilling to discuss cancellation, ask if he would be willing to make up the cost differential by paying some closing costs or throwing in some upgrades. If he is still unwilling to budge from his position, then (as a last resort) threaten "legal action" and then follow through.

Good luck,
Jessica Bryan