Q: I have signed a contract to purchase a home from a builder. In the contract, a 10 percent interest rate for a first trust loan was indicated, and in other promotional material, the builder emphasized that he guarantees the 10 percent interest rate. Now the lending institution refuses to commit itself for that 10 percent rate, and the builder wants to refund my down payment.

Please inform me whether the builder has any obligation to fullfil his guarantee for the interest rate. In other words, do I have any legal basis to insist that the builder back up his word?

A: Unfortunately you must look at the fine print in your contract. I assume that the standard "boiler plate" language contained in most new home contracts is included near the end of your contract. That language generally reads as follows:

The forms of this contract shall be binding upon the parities hereto. This is the entire and final contract between the parties hereto and they shall not be bound by any terms, conditions, statements, warranties or representations, oral or written, not herein contained ...

Technically and legally speaking, this means that unless the representations by the builder about the 10 percent rate were contained directly in the contract itself, the builder cannot be held responsible for those representations.

But, don't give up hope. You do have a number of remedies to pursue.

First, discuss the situation completely with your builder. Tell him that you are upset and concerned, and that you will be taking all appropriate legal steps available unless he backs up his 10 percent guarantee. Often, misunderstandings can be clarified -- and errors correcred -- if only both parities will sit down to discuss the problem in a logical and relaxed setting.

If that doesn't work, write a letter to the local consumer department in your county. Most of the counties (and the District of Columbia) have active consumer affairs offices that will investigate your complaint.

Basically, you want to file a complaint indicating that there may have been false a dvertising on the part of your builder. If he guaranteed a 10 percent rate in the promotional material, he should be bound by those statements.

Finally, you may want to discuss this matter with your attorney, since there may be a legal way of holding the builder to his representations. If the builder fraudulently misrepresented the 10 percent rate, you might be able to hold the builder to those representations -- or get damages for any extra interest rate which you may be forced to pay.

And even if there is no fraud, some courts may be sympathetic to your case, on the grounds that you relied on the representations of your builder, and signed the contract based on his promises. There is no question that you can get your deposit refunded in full, but of course that will not be much consolation to you. The interest rates have risen rapidly and the market value of the house has no doubt gone up also.

Thus, builders often prefer to give potential purchasers their money back, so that the houses can be put back on the market for higher prices.

In the future, here is a suggestion that would have solved your problem: Whenever you sign a contract to purchase property, if the seller (builder) makes representations -- in writing or orally -- make sure that they are included in the contract itself. Put all promises made by the builder in writing in the contract. If there is promotional material prepared by the builder, have the contract specifically state:

"The promotional material attached to this contract as Exhibit "A" is incorporated herein by reference and made a part of this contract ."

By incorporating the promotional material into the contract, it becomes a part of the contract, and you have the right to legally demand full compliance from the builder.