Expert: liznarr - 9/30/2006

Question

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Followup To

Question -
Hi Liz,

My husband & I moved to Lexington, SC from Pooler, GA earlier this year. We put a contract on a new constuction home from national builder D.R. Horton back in June of this year. The home was at the rough mechanical stage (basically just a frame & roof).Unfortunately, as the construction process progressed, we began having concerns about the quality of the workmanship of the home (e.g. inadequate borate termite treatment, entending the existing foundation/roof line on the garage side of the home because it wasn't initially done incorrectly, no vapor barrier to be installed on the exterior, improper ductwork installation). Anyway, after going back & forth with the builder about our concerns, we felt that it was in our best interest not to continue with the purchase (The home was still over a month away from completion).

So we informed our lender that we would not be purchasing this house & also the D.R. Horton sales manager that we wanted to be released from our contract. She told us to put our concerns in a letter, sign a purchase agreement release form & give them to the sales agent. Well, we submitted a detailed letter to the sales agent & signed the form he provided (against my better judgement) because the form was not completely filled out or signed by the D.R. Horton authorized representative. Well, it's been a month since we submitted the letter & form and we haven't received a completed release form from the builder. We, as well as our real estate agent, have tried to contact both the agent & the sales manager to find out the status of the release agreement, but we are not getting any response. Although we asked to have our earnest money returned, we realize that we probably won't get it back because the contract was heavily in favor of the builder & we didn't have any contingencies added, but we would just like to have a completed release form that states who is to receive the earnest money & is signed by both parties. At this point, I'm not even sure we have been released from our contract.

Sadly, our own agent hasn't been very helpful in this process and we still have to find a house, so any advice you can give will be greatly appreciated.

Thanks,
Shirl         



Answer -
Hi Shirl,

Sorry to hear you are having difficulties with not only the builder, but also both agents as well.

Hopefully, your Contract of Sale has some language in it relating to quality of workmanship, which was your initial problem/concern.  Check it carefully and see if you can find any such language that might address any remedies available to you.  Builders are held to a minimum standard of care which must be met.

Your Contract should also address any remedies for each party in a situation such as yours.  If the builder corrected all your earlier concerns, and you have no other “out,” then it would be the builder’s call whether or not to release you and return your earnest money.

The bottom line is that no one can FORCE you to purchase any home, Contract or not.  Any resulting action, however, that the Seller/Builder might decide to take per Contract remedy is what you would be concerned about since you have refused to close.  I can tell you that most builders do not like any adverse publicity at all; and with another opportunity to sell a home not yet completed, this builder apparently has not suffered any damages thus far; and I would hope would release you.

What bothers me as much as anything about your situation is the fact that you are not receiving any answers at all – from anyone.

I would suggest the following:  Call the DR Horton Sales Manager and advise that after a month, neither you nor your agent have had any response at all to your written request and follow up calls.  Ask who the Broker-in-Charge (BIC) of their sales office is (and this could well also be the Sales Manager), and then ask to speak with the BIC.  Don’t let them put you off or stall you.  If the BIC is not in, ask for a cell phone number.

Ask the BIC what he/she intends to do.  Let him know that if you do not receive an answer within 24 business hours, you plan to make a formal complaint to the SC Real Estate Commission – that all you are asking is to be released and have your earnest money returned due to their previous poor quality of workmanship -- and that their behavior now only reinforces your decision.

There’s an old saying that “the squeaky wheel always gets the grease.”  If you can tactfully convince the BIC and builder that by releasing you and returning your earnest money, you will not file any complaints you might be entitled to (including the SC Contractor’s Licensing Board); and maybe DR Horton will agree to do the right thing and not only release you, but also refund your earnest money.  A complicating factor could be if you added extras in the house which the builder had no original plan to add.

When people become as unhappy with a builder as you are, most volume builders would be happy to release you with good cause.  Then you can simply part ways quietly.  If they do not agree to release you or if you are unable to still get an answer, you need to be prepared to follow up with formal complaints.

I’m sure they will be disappointed to lose a sale (although they should have no problem selling the home again); but do let them know that you have lost/wasted a lot of time during this process initially due to their bad workmanship, and for both sides to simply cancel the Contract and move on is in everyone’s best interest.

I am located very close to Lexington, SC.  If you’d like to email me personally, please do so at liznarr@sc.rr.com, and I’ll be glad to assist you further and speak with you by telephone if you will send me your number.

Good luck to you, and feel free to write again should you have additional questions.

Regards,
Elizabeth Narr


Hi Liz,

Thank you so much for your prompt and informative response to my question. Your advice is the first concrete information that we have received, & I now feel like we have a plan-- thanks to your suggestions.
I've looked over our very lenghty contract for a clause that pertains to workmanship quality and the only thing I see is the following: "Seller agrees to complete the construction of this home in accordance with the quality standards, materials and finish as are otherwise being used by Seller in construction of new homes in this subdivision." This wording seems very ambiguous to me. What do you think?
Also, thank you for offering to speak with me, which I would like very much. I will email you with our phone number.

Thank you again,
Shirl


Answer
Hi again Shirl,

Yes, that language sounds a bit ambiguous, but I think what the builder is saying is that the quality of the materials and finish in your intended home would have been very similar to his other homes in the same subdivision.

Even if that’s all the language in your Contract that speaks to workmanship, the builder is accountable to Code standards whether they are outlined in the Contract or not.

I will give you a call sometime over the weekend.

Thanks,
Elizabeth