Home Builder Deposit Refunds: What Buyers Should Know
The idea of being able to choose everything, from the type of floor you have installed in your kitchen to the specific style of doorknob you want throughout your home brings about a lot of excitement. Without a doubt, building a home is a dream come true for many people. However, even with all the excitement, things can change quickly. Whether the buyer decides that they want to build in another community or their loan pre-approval changes to denial, the buyer may need to terminate the contract. When this type of scenario occurs, most people want to know how they can get their deposit back.
Purchase or Build Contract
If you need to back out of the building contract, the first thing you need to do is to review the contract itself. All of these contracts must include precise language about refunds. For example, the contract might read that you have 72 hours to request a full refund, that any request between 73 hours and 96 hours receives a 50% refund, or that there are no refunds at all. Unfortunately, even if the contract states that you cannot have the funds returned to you because you signed the agreement, it may be impossible to void it.
If the building contract states that you can have your funds returned to you within a certain window and you are still within this time frame, you must notify the correct party. Although you want to let the builder know right away, you must remember that it is up to you to officially request a refund. To go about this process, you will typically need to contact the broker or escrow holder directly to request a refund. The reason this step is important is that to receive a refund, you often need to sign a contract termination agreement, and the builder cannot complete this step on your behalf.
Sometimes a buyer does everything they are supposed to, but they have to fight for a refund. The builder might say they lost their paperwork, or the builder may be ignoring their calls, in these instances, a real estate law firm may be necessary. Often, once the builder realizes that the buyer has an attorney who understands the law working with them, they will return the money. If not, however, the attorney can take the matter to court to ensure the deposit is returned.
If you are in a situation where you are legally due a refund on your deposit and the builder is ignoring your request, you must have someone willing to stand up on your behalf. Contact an attorney for help.