Home Construction Companies

How can I recover my earnest money deposit on a newly constructed home if I am declined for financing?

My wife and I signed a contract to purchase a new home in August of 2005. Since then, our finances have suffered because of unexpected medical expenses and a prolonged illness in the family, requiring our assistance. While the new home has been constructed like we dreamed, we have been declined for financing because of our debt ratios and because we could not come up with the down payment because my spouse has been helping her parents extensively and unable to earn a steady income. The construction company has given us two weeks to come up with financing, or forfeit our earnest money, approximately $34,000. I’ve worked with several different companies and all have declined our financing. The home was constructed in VA. After re-reviewing my contract, I did not find any financing contingency in there that would refund my deposit if my financing was declined … it appears that the builder has insured that they could keep the deposit under all circumstances. Do I have any remedy?

that is usually a no-brainer clause in a real estate contract, that and if the home doesn’t pass inspection (high repair costs). Your agent should have included that in the contract when submitting your offer.

The problem is if it is a new development, often they have their own agents doing the sales, so they probably aren’t including any nice back door clauses like that.

But, your house has probably appreciated in value since your offer, so the builder might be happy to get out of the contract, too, so they can sell it for more.

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Okay, this is a longshot, but contact www.naca.com they are a non-profit housing advocacy group. they really aren’t geared for people in your situation, but they hate real estate bloodsuckers and they might be able to strong arm this builder or recommend a decent attorney, or stage a picket in front of this development. NACA got their money from a predatory lending settlement against Fleet bank and now they do their own loans. Good luck, $34,000 is a lot to lose…

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