Sonali Arya's builder promised to settle on her new house in Gaithersburg on Oct. 31, but during the walk-through that day, Arya said, she couldn't believe how far from finished the place appeared.
The heating system was not working properly, the builder had forgotten to build the deck, pieces of molding "kept falling off" and the house had no phone, no cable and no mailbox, recalls the 26-year-old social worker.
Sonali Arya found that her house was far from finished at the time of the walk-through.
(Emilie Sommer For The Washington Post)
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Less Stress at Settlement
Here are some tips from experts on how to reduce stress when buying and closing on a new house:
• Look for a reputable builder. Check him out by talking to three to 10 previous buyers.
• Ask people who have already moved into the community about their experience with closing: Was settlement delayed? Why? And did the builder offer to pay for storage space or for any part of the delay?
• Know what is in your contract. Hire a lawyer experienced with residential real estate law and with the contract laws of your community. Put any changes to the contract, such as more time for notification of a settlement date or for appliance upgrades, in writing. This includes any changes promised orally by salespeople or other builder representatives.
• Don't be afraid to ask for changes in a contract. Though production builders generally do not make changes, sometimes they will, according to local real estate lawyers. "It doesn't hurt to ask," said David N. Crump, director of legal research for the National Association of Home Builders. "They're going to work with you; they don't want to create any hostile environment."
• Hire a private home inspector before the house is built, to follow it through construction and to accompany you on the final walk-through. Don't rely on county inspectors to find problems.
Sometimes builders will balk at allowing a separate inspection, so include that in a contract addendum. Be prepared if a builder asks to approve the inspector because he has had a bad experience with one in the past.
• Some contracts say the builder must give just five days' notice of the settlement date. Columnist and new-home-book author Katherine Salant says, "You should insist on changing this to have adequate time to arrange for a move." She recommends asking for at least 14 days' notice and as much as 30 days.
• Make sure you get a certificate of occupancy from the local jurisdiction. The certificate indicates that all the county inspections have been completed.
• Recognize that punch-lists, which tally up the items in the house that are not ready, are routine and that builders' contracts give them time, sometimes as much as two years, to make fixes.
• Remember that problems happen. Stay calm.
• Call city or county building officials if you think there is a code violation.
Many local jurisdictions also have special consumer affairs offices that deal with complaints about new-home builders or contractors.
• If you have a problem, document everything in writing and send all correspondence by certified mail.
-- Sandra Fleishman
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"It was horrible," Arya said. "It was just shocking. We had nine pages of notes, and the house looked like it was literally falling apart. . . . I almost cried."
Arya's situation was more complicated than many, but offers a basic lesson for new-home buyers: A new house doesn't have to be perfect -- and often isn't -- when the builder turns it over.
A house, for example, does not have to have landscaping, a driveway, a mailbox or phone or cable service to be "substantially complete," as required for settlement by most sales contracts and local laws.
Most buyers probably think of punch-lists, which tally the items that still need fixing at the final walk-through, as a rundown of minor items. But they can include big-ticket things, such as a deck or grading, that are not critical to a move-in. Punch-lists can run from a dozen items to more than 100 these days, builders said.
But buyers and builders can disagree about what should be ready at settlement, according to real estate lawyers and consumer advocates. And that not only can cause confusion at settlement but can lead to lost tempers and possible lawsuits.
Among Arya's complications was whether the house was substantially complete without heat. Also, one of her complaints was that the builder was pressing her to settle. These days, it is more common to hear that builders are delaying settlements because of bad weather and incredible demand, rather than speeding them up.
Despite the complications, Arya's problems seem to have been resolved happily. She said she was ultimately satisfied when her builder agreed to delay settlement for a week and corrected "99.5 percent" of the problems.
While builders in general say that they are meeting legal requirements for settlement and for warranties that fixes will be made if necessary after settlement, some consumer advocates say the process is just too skewed toward the builder.
"If a buyer approaching settlement is too demanding or uppity, the builder will simply give them their deposit back and sell the house to someone else at a higher price," said Beau Brincefield, a lawyer from Alexandria.
"Builder contracts are uniformly unconscionable . . . because virtually every builder contract I see takes away from the purchaser almost every conceivable right that the purchaser would want to have," he said.
Builders and other experts say consumers can have unrealistic expectations about the condition a house will be in at closing. "From the customer's point of view, a house may not seem ready" at settlement, "but from a contractual perspective, it is," said Louis Genuario Jr., president of the Northern Virginia Building Industry Association and co-owner of Genuario Cos. in Alexandria.
Genuario said his firm does two walk-throughs with buyers and usually whittles the punch-list down to "10 or 15 items that we either can't complete because they're not available or they're just cosmetic things" or they are items "that we couldn't do because of the weather."
