Contract Killer: How Duration and Escalation Clauses Can Make or Break Your Dream Home Deal
Download MP3Episode Description
In today's volatile real estate market, new home buyers are discovering that their dream home contracts can become nightmares. Builders are canceling contracts outright or demanding tens of thousands more after completion. Is this legal? What can you do? We break down the contract clauses that are turning homebuyers' lives upside down and explore your options when builders try to change the deal.
Key Topics Covered:
- Contract Cancellations in New Construction - How builders are voiding pre-agreed contracts or demanding $50,000+ price increases after completion
- Escalation Clauses Explained - Built-in contract provisions that allow builders to adjust prices when material or labor costs exceed predetermined percentages
- Material Substitution Rights - How escalation clauses give builders permission to substitute materials and adjust purchase prices accordingly
- Duration Clauses and Contract Termination - Provisions that allow builders to cancel contracts outright when construction can't start or finish within specified timeframes
- Builder Profit Motives vs. Legitimate Cost Increases - Distinguishing between actual increased building costs and builders seeking additional profit from market appreciation
- Real-World Case Study - South Florida buyers contracted at $297,000 in February 2021, faced delays and were asked to pay an extra $40,000 due to market appreciation to $380,000
- Permitting and Supply Chain Delays - How COVID-related delays in government agencies and supply chain issues create opportunities for contract cancellation
- Good Faith Contract Components - Understanding implied good faith obligations and when builders may be acting unfairly
- Force Majeure Clauses - Outside forces that may legally allow builders to exit contracts when projects become difficult or impossible
- Legal Validation of Builder Claims - Importance of verifying whether material costs actually increased as claimed and matching scenarios to contractual triggers
- Your Options When Facing Contract Changes - Steps to take when builders attempt to cancel or modify your contract terms
Key Takeaways:
- Review Your Contract Carefully - Look for escalation and duration clauses that give builders significant power to modify or cancel
- Verify Cost Increases - Don't take builders' word that costs have risen - investigate actual material and labor cost changes during your contract period
- Seek Legal Advice - Get qualified legal counsel to review your options and determine if builder actions are legitimate
- Document Everything - Track construction timelines and whether builders actually started within required timeframes
- Know Your Rights - Understand that you may have legal recourse even when contracts seem to favor builders
Disclaimer: This episode provides educational information only and does not constitute legal advice. Consult with a qualified attorney for guidance on your specific situation.
