New construction - misrepresentation by agent. Long story.

beepsJune 15, 2012

I need some advice and suggestions. I'll try to make this brief - but it is a long story...

At the end of Jan I purchased (put down my 30%) a home from a builder and am running into problems such that what should be a fun experience, is turning into anything but fun. This is in a development with 4 models from which to choose, not a custom build. Let me add I am buying out-of-state so some things I had to do before I even saw the lot and model home in person, but a relative lives there and was my eyes on that end. And, I requested a delayed build so construction is due to start on 7/1/12.

* The lot is really an oddly-shaped and poorly engineered lot with a lot of square footage that I am having to give back to the HOA because it is completely useless. I thought this was the case early on but the agent assured me it was not, and I have pics she sent showing where she thought the lot lines were. She was incorrect. (My relative didn't read things right either, but the agent should have been able to.) I have lost 500+ feet at the back of the lot, and one of the pluses of the lot for me was the size.

* The lot is nearly too narrow on which to build the model of home I purchased. Yet, this is the only model they will allow to be built on this lot. All the shifting of the way the home sits on the lot to capture the best views, that I was told could be done, can't because there is exactly one way to fit the home on the lot.

* Even with the home fitting on the lot that one way, there is less than 5' clearance on a cul-de-sac side of the lot. The builder doesn't want to build a retaining wall to at least give me as much of my side lot as possible. It will be expensive for them. Too bad, I say. But when I say something like that, although more appropriately, I'm told I'm being "contentious" - probably true at this point although maybe just assertive. Besides which, the lots are supposed to have at least 5' clearance on both sides.

* The sales agent, from whom I bought the home, misrepresented lots of things. She told me "anything could be done" in the way of customizations and that "there were allowances" for things. Wrong and wrong. The builder is actually charging MORE THAN RETAIL for things such as faucet upgrades. So, at this point I'm having all standard faucets, door hardware, and lights put in and will strip them all, donate them to Habitat for Humanity, and put in the ones I want when I get there. I'd rather donate to Habitat for Humanity than to the builder. (I'm not buying my Washer and Dryer from them but they are charging $1000 over retail on both the washer and the dryer. I hope no one is gullible enough to buy them. I have pointed this one out to the builder as in... really??) Oh, and the agent abruptly quit so everything she said that I can prove I have had to, and if I can't they are charging me new options prices (of course much higher) than the original.

* They are charging me a $3200 upgrade for granite for which the slabs themselves would only cost $3600. So the "allowance" I'm getting by not using the standard granite is $400. Really? 2 slabs of the standard granite choices only cost $400? Fabrication should be a relative constant.

The list of issues goes on and on. For example, I was quoted a price per foot by the original agent (and I have an email of this, from before I actually signed to buy the home because it mattered) that to extend the block wall (which is used as the fencing) would cost $10/linear foot. Well, apparently it should have been $10 *per course* per linear foot, and it will be about 6 courses high. So... that's a huge difference when I'll be adding 100+ feet of fencing.

My random thoughts - the lot is still the best in the development. They already offered to let me purchase another lot, but this one only has a neighbor on one side so I don't want another lot where I will be squished between two other houses. I was the first (or second) one to purchase a lot and still have a nice lot despite the issues if they will put in the retaining wall and at least give me 5' clearance all the way along the one side of the home. I do think I want to move to the area - although this has greatly soured me on doing so. It's been fun picking out all the tiles, cabinets, etc. and I will be very disappointed if all that time and effort has been for nothing.

Apparently with a delayed build, written into the original contract should be a statement that prices on all options will be as of the date of the beginning of construction, not the contract date. So they can raise them as much as they'd like and I'm stuck? Luckily my inept agent forgot to put that in the contract so I've held them to some of the original prices.

I don't mean for this to be a rant (well, maybe a little :)- I just wonder what I should do. If I get assertive, they think I'm being contentious and argumentative. (I'm a female by the way. I think if I were a male this would be seen quite differently. Not trying to be sexist, but it is what it is sometimes.) I've been told I've already been "difficult" enough that I should hire an independent inspector to keep an eye on the building process should they try to cut corners because of my holding them to the original cost on a few small items. We haven't solved the $10/linear foot issue yet.

My options?

*I am not an attorney but, based on some research I have done, believe I could legally get out of the contract because "material mis-representations were made by an agent of the company that were pivotal in my decision to purchase the home." I'm seriously thinking of asking to be let out of the contract with my down payment reimbursed plus interest. If they give me a problem then hiring an attorney with them having to then reimburse attorney's fees and court costs.

*Build the house with all standard stuff and just sell it. I could probably get slightly more than I paid for it with the exception of the commission. The home is right across the street from the models, so this might look bad to potential buyers. That is so not my problem.

*Build the house with all the standard stuff and then strip it all (floors, countertops, etc) and put in the things I have picked out. Again, a remodel going on across the street from the models may not look so good for the builder.

Thanks for your time reading this. Seriously, this is an abbreviated version of the difficulties. I'd appreciate any thoughts/ideas/suggestions/different ways to see things.

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Oh, and the option I'm currently pursuing is going standard with all items I can from door hardware, faucets, lights to kitchen backsplash and tub surround. Everything that would require any actual demolotion - floors, tiling the showers, cabinets, and countertops - I'm currently sucking it up and accepting their outrageous upgrade prices (although not quietly).

    Bookmark   June 15, 2012 at 2:05PM
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It is very standard for tract builders to charge ridiculous upcharges for things. It is very frustrating. There is little you can do about it. Most people would say get out before you start if you can.....

    Bookmark   June 15, 2012 at 2:49PM
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Hire a real estate attorney. It will be worth the expense! I'm not a practicing attorney, but I do have a JD and took a few real estate law classes in law school. Based on the information you've provided here, I think you can get out of the contract.

    Bookmark   June 15, 2012 at 3:20PM
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First you need to make a decision - is this a home and area where you want to live?

If not - hire a lawyer and get out of the contract.

If so - build the house with mainly standard items and then redo it yourself. Though I would consider upgrading: doors, floors and cabinets as that is a pain to change later and the demo cost my be worth the surcharge.

    Bookmark   June 15, 2012 at 3:41PM
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I agree that you should probably do your best to get out of this deal BEFORE they start actually building the house. If you've had this much grief already just over the lot itself, imagine how bad it is going to get when house building starts! Do you REALLY want to go forward with building a house that cannot be situated to take advantage of views and must sit 5' from a cul-de-sac (did you mean a gully or escarpment of some sort?), on a lot that is considerably smaller than you were originally led to believe it would be, while trying to work with a builder who wants to charge ridiculous premiums to upgrade fixtures and finishes to the kind and quality you want, who is already calling you "difficult" and who you already fear will cut corners on your build to make up for their "lost profits" in other areas.... all to wind up living in a neighborhood where all of the houses are duplicates of one of just four designs??? Sorry but I can't help but cringe just envisioning the resulting neighborhood. Even back in the 1960s when my folks bought their first 1600 sq ft tract house, the developer had 12 designs for them to choose. Still the song "little houses made of ticky-tacky" applied all too well to our neighborhood!

Yes, go hire a good real estate litigation attorney. But before you go see him/her, spend some time getting the details of exactly what you've experienced down in writing in a more comprehensible way.

I'm not trying to be harsh but your post here on GW rambles around so much that it is really difficult to understand what the important issue are. I can tell immediately that you are distressed but it is difficult to tell whether you have a cause of action or not. Based on what sense I can make of your story, I think you probably have a good basis for having the contract rescinded but it depends on exactly what you were told, when you were told it, and what opportunities you had to discover the truth for yourself prior to signing the contract deeds.

But, as an attorney I can tell you that when someone comes into my office with such a jumbled explanation of their problem, if I take them as clients I find that I invariably wind up having to spend hours and hours simply untangling the whos, whats, whens, wheres, and whyfores of their story before I can even determine IF I might be able to help them... much less figure out how best to go about helping to resolve the situation. I absolutely HATE taking on a client, charging them for the time spent untangling their story only to have to tell them that I can't do anything for them. I usually wind up giving them their money back.

Much as I sympathize with distressed people who have clearly been hurt, in order to survive financially myself, I simply can't spend those kinds of hours for free very often. So a lot of the time when someone comes in with a disjointed story, I wind up trying to shuffle them gently out of the door as quickly as possible without taking them on as clients.

So, before you go see an attorney, sit down at your computer, open a word document and create a table with four columns. Label the first column "DATE", the second column "EVENT," third column "NOTES" and the fourth column "SUPPORTING DOCUMENTS". Now, using the table, organize everything that has happened in your relationship with this development company chronologically. The beauty of using a table format is that if you're halfway thru telling what happened in March and you suddenly remember something that happened in February, you can go back, insert a new row in the table, and add in the event.

The date column should have exact dates when you know them...if any communications were by email or letter, dig those out and copy the dates down as well as the pertinent info. If you don't know an exact date, provide the month/year or the closest approximation of it that you can.

The event column should list FACTS only without any commentary. (For example, "Sales agent told me the lot was X acres extending XXX feet from front to back and XXX feet from side to side at the widest point.) Use the "NOTES" column to add explanations/commentary such as "I later found out that the lot is considerably smaller - see date." So, if the builder told you something and you later found out that the thing he told you was not true, your table will have two entries related to that fact. The date he told you X and the date you found out that X was not true. Each of these two entries will reference the other with a "see date in the Notes column. Make sense?

Finally, if you have any documents that support what you're saying, indicate what the document is in the supporting documents column. For example, if you have an email from the sales agent where she tells you that the lot is a particular size, in the Supporting Documents column you would write "email from sales agent (name) dated XX/XX/XXXX, subject line YYYYYYYYYY.

Start at the very beginning which would be how and when you first heard about this particular development. Do your best to put down, in chronological order, all the things that happened, all the things you(or your relative) were told by the builder/developer/sales agent prior to entering into the agreement that made you want to purchase this particular lot, the dates when documents were signed, and all of the things that you have been told by the builder since entering the contract.

In your Notes column, also identify each person that you mention. (You only have to do this the first time you mention a person but, as an attorney, I would want to know your relative's name and how to contact her for verification, the name of the sales agent, etc.)

When you have all the details you can think of laid out in chronological order, go back thru and highlight those details that seem MOST important to your story. Then when you go see the attorney, use the highlighted portions of your document to tell him in a very cogent manner what has happened to you. He'll be much more likely to want to take you on as a client. And, when he agrees to take you on as a client, you can give him the entire history with all the rest of the little details. He may see something in that that seemed trivial to you but may help bolster your case.

The other thing you need to do before seeing an attorney is to decide what solution you would be really happy with and then what LESSER solution or solutions you would be willing to live with even tho they wouldn't make you totally happy. For example, you might to have the contract voided, and get your money back with interest on it plus have the builder pay you attorney fees. Certainly if your builder has been defrauding you and lying to you, that would be fair. But Realistically tho, if it would save you from further aggravation, would you not be satisfied to have the contract voided and get, say, 90 percent of you money back even if you had to pay your own attorney fees as long as they were less than say $5000?

I ask because you need to totally aware that in situations like this, it is HIGHLY unlikely that you will come out of it totally unscathed. That is a nice way of saying, do NOT bet on getting your money back with interest. If you hang on thru a full trial, and if you have all the facts and all the law on your side, you might win a judgment that says you get your money back with interest...but then you'd have to collect it and builders have a notorious habit of declaring bankruptcy. Unless your judgment says your builder defrauded you and that your damages are due to his fraud, your builder can totally wipe out your judgment by declaring bankruptcy. Happens all the time. And the homeowners are left paying hefty attorney fees and court costs on top of the damages they've already suffered. So while it might be galling to do, it would probably be better to accept early on a settlement offer that gets you out of the contract and actually gets you some portion of your money back.

I do wish you the best of luck.

    Bookmark   June 15, 2012 at 5:39PM
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1) Do you want the lot and the house? If yes go ahead and see if you can negotiate may be something extra. Options at cost? 10k - 15k in free options.

2) If you don't want house and they offer mutual release I would take it. You will never get the interest. Forget it.

3) If you don't want house 90% of your deposit - you better off take it. Do not go selecting options... You may and will loose your deposit.

You do not know what is involved in filing complaint, answer, studying contract, answering interrogatories, dealing with request to produce, admittance, dealing with long discovery, motions, waiting three years to be heard, opening statements / closing statements, dragging friends, family, neighbors, experts to court, etc etc etc.

Courtroom is a circus. Judge may have bad day, one of your witnesses having bad day, said something stupid, juror having some agenda, last minute bogus motion, bad deposition. You do not want to waste time and money on that. Two or three years of your life could evaporate with attorney fees and may be add defendant attorney fees on the top of that. I would negotiate and avoid direct courtroom battle. Trust me on that one.

I would tell builder to hold-on on construction, inform them that there was misrepresentation by the agent. Tell them that you disagree with upgrade prices, ask them for all docs, notes, pictures, videos, email etc they communication with the agent. They may be willing to reduce "upgrade prices".

Your situation is not uncommon. A lot of new constructions priced at, or near the cost. Upgrades are what driving the profits. "what should be a fun experience" - right, home construction on limited budget is never fun.

Stick to your guns and negotiate, negotiate, negotiate.

Do not cry like a little girl because there is $90 for extra HALO light upgrade cost, or $30 for an extra outlet.

    Bookmark   June 15, 2012 at 8:35PM
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Thanks for all the helpful feedback!

Wow, bevangel, I feel like I owe you a consult fee. Thanks so much for all the great advice. I will do as you suggested. It will help for me to see it all in black-and-white too instead of having all the issues running around in my head. Maybe it won't look so bad.

And 4 floor plans isn't much, is it? If you think of "little houses" with that, imagine it now with only 8 exterior color scheme options, 7 of which are horrid so everyone is going with one of them. But, houses next to each other can't be the same color so in reality every other house will be the same color. Tried to talk to the builder about that issue too and have already looked into how I can get HOA approval for another color scheme. I guess I can see why I'm on their "pita" list. There are only 22 houses in the first wave, I'm sure they will change things around a bit for the second wave.

As for bankruptcy - I don't see that happening. They are a huge builder in the area. And very well respected. Now that part I can't quite figure out...

Bottom line - sounds like I definitely want to avoid court. Maybe see if they will agree to cancel the contract.

Again, thanks for your suggestions and advice.

    Bookmark   June 16, 2012 at 12:33AM
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