Buying a New Home from Builder? Make Sure you're Protected
It is the home you have always dreamed of buying, but when the home
builder fails to deliver everything promised, what recourse is available
to you? There very well may be options available to you now that
increased attention is being directed to builders who renege on the
promises they make to home buyers. Just some of the problems that home buyers
have encountered include paying deposits but discovering
later that builders had failed to begin or finish homes as promised.
Other problems include builders failing to pay subcontractors. To avoid
experiencing these types of problems, it is crucial for homebuyers to
clearly understand their rights as well as what options are available to
them.
Despite the current real estate crisis, thousands of new homes are
purchased around the country each year and it is important for home buyers
to understand that new home purchases are typically protected by state
law.
One of the most important things you can do to ensure that you are
protected when you decide to buy a new home from a builder is to
make certain that you only work with a reputable builder. If you are going
to work with a builder, certify they are registered first. In many
states, builders must register with an office of the attorney general.
By checking with your attorney general first, you can find out whether
builders are required to be registered and if so, whether there have
been any complaints filed. Considering the fact that for most homebuyers
it is their life savings as well as their dream home that they are
putting on the line, this is definitely a step that should not be
overlooked.
Keep in mind that in many states the registration of a builder can be
suspended or may be denied or revoked for a variety of reasons. One
reason includes demonstrating a pattern of poor workmanship.
It is also important to know how to protect your deposit.
Generally, your deposit will be placed in an escrow account. The
exception to this rule would be if the builder has a corporate surety
bond or if the builder has filed a letter of credit with the state.
Regardless, the builder must let you know whether your deposit has been
protected through bond, letter of credit or escrow account. Always make
sure you know exactly what has happened to your deposit, just in case
there is a problem later on. One of the biggest problems that some
homebuyers have run into is finding out that their deposits were never
actually placed into escrow or protected by letter of credit or bond. To
avoid this problem, you should take the extra step of actually
verifying the builder's escrow account. You can do this by contacting
the bank. If the builder uses a letter of credit or builder's bond,
contact your attorney general's office to verify it.
In the event that you do experience problems with your builder, the
first step that you need to take is to contact the builder first. Make
sure that all correspondence with your builder is in writing and that
you have kept a copy. Ideally, ensure that you send all
correspondence by certified letter. In addition, you should keep
a log of all contact that you have with the builder. This type of
documentation can prove to be quite helpful if you are not able to
receive immediate satisfaction from the builder.
For the most part, your best option to resolve any problems that you may
experience is keeping an eye on the builder and
catching them early before matters are allowed to proceed too far.
Remember that when you are buying a home from a builder is not the time
to be too trusting or just assume that everything is going well simply
because you have not heard from them. This is your money and probably
the largest investment you will make in your lifetime. It is up to you
to stay on top of things and check in regularly to ensure that progress
is being made according to schedule. The moment you notice that
something is off, address it, do not wait. If the builder sees that you
are diligent and top of matters that can go a long way toward reducing
potential problems.
If you still do not receive the response you need from the builder, it
may be time to contact your state's attorney general office or have your
attorney speak with the builder in order to get to the bottom of the
problem and get things moving.
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