He recommends that buyers have a lawyer look over the sales contract before signing because "every contract may have different provisions."
As with any contract, he said, the buyer has the right to demand changes in the contract. But, he said, the builder may or may not accept them.
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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A big problem, said lawyer Savitz, is that people just do not read their contracts. "My preaching is to make sure that they actually understand what they've agreed to. It sounds simple, but it's not," he said.
For instance, said Kensington lawyer Andrew Fitzgerald, builders' contracts may promise a design or lot "similar" to the model home, "but your definition of what's similar, say what you consider a similar room size, may not be the same as theirs."
The same goes for a buyer's definition of "substantially complete," said Fitzgerald. The biggest disputes "seem to be over unfinished landscaping, grading and driveways," he said.
While builders may say that they could not finish those items because the ground was too wet or cold and will generally promise to complete the work as soon as possible, buyers sometimes see those items as essential, said Fitzgerald.
But most jurisdictions routinely allow builders to deliver new houses without driveways, lawns and decks because of weather conditions, say builders. And in the winter, said Havenner, a working air conditioning system is not required either.
Because deliveries slip, author Smith recommends adding two weeks to a builder's estimate and creating a backup plan. That means waiting an extra month to give notice to a landlord, or writing a leaseback option into the sales contract on your current home.
"There's no reason to add stress," she said.
Wendy Shapiro, a Montgomery County real estate agent who is buying a new house in Olney from Greentree Homes, said she is not stressing over her upcoming settlement. Though the builder had originally promised an October or November delivery, she said she was not surprised when the date slipped to Dec. 31.
"Most everyone knows that you're not going to get the house when they tell you," said Shapiro. "Those that purchased in May figured you'd be lucky if you were in by December."
Because Shapiro and her husband have sold their townhouse expecting a Dec. 31 delivery, she said "there will be an issue" if the date slips again. Her first hope would be to "renegotiate the contract" with the buyers of her current house to allow the family to rent it back for a longer period of time. Still, she predicted, her family will probably end up having "to put everything in storage."
She said, "The builders are doing the best they can. We see them out here at seven in the morning and at seven in the evening, so you have to assume there isn't anything more that they can do."
Lawyer Savitz said it is "not uncommon . . . for builders to threaten to sell to someone else" if a buyer objects to delays in settlement or finds problems and demands fixes before going to settlement. But "typically it's going to take longer to resell the house than to just fix it, so the builder usually makes some accommodation," he said.
