Reading a Builder's Purchase Contract Before You Sign

A resale purchase in California usually runs on a form both sides recognise. A new-home purchase often does not. The document a builder puts in front of you is the builder's own agreement, drafted by the builder's lawyers, and it is the instrument that governs everything from your deposit to your walkthrough to what happens two years after you move in.

That is not sinister. A company selling many houses from one set of plans has good reasons to use one document. But it does mean the paperwork is not neutral ground, and the buyer who reads it as a formality is signing something they have not read.

This article extends the new-construction guide and follows on from the new-build process guide, which lays out the sequence the contract sits inside.

A necessary statement before anything else. I am a real estate professional, not an attorney and not a contractor. Nothing here is legal advice, and nothing here characterises what any particular builder writes into any particular agreement. Every point below is a QUESTION TO ASK OF YOUR OWN DOCUMENT, with a real estate attorney reading it alongside you.

Get the whole document, early

The single most useful thing a buyer does is ask for the complete package before the day of signing. Not the summary, not the price sheet: the agreement, every addendum and exhibit it names, the option and upgrade schedule, the warranty document, and any association material that comes with it.

Ask for it in a form you can send to someone else. A document you can only read at a table in the sales office is a document you cannot get advice on.

If the answer is that the package is only available at signing, that is itself information. It is a reasonable moment to slow down rather than speed up.

Read the exhibits, not just the agreement

New-home paperwork is layered. The main agreement is often short and readable. The substance frequently lives in the attachments, which is where specifications, allowances, schedules, warranty terms and dispute provisions tend to sit.

Two habits help. First, make a list of every exhibit the agreement REFERENCES and check that you physically have each one. A document incorporated by reference can bind you whether or not it was handed to you. Second, read the exhibits first and the agreement second. The order feels backwards and it is much more revealing.

The questions worth writing down

Take these to your attorney rather than to the sales office, and ask them about YOUR document rather than about builders in general.

What exactly am I buying? How are the plan, elevation, lot and specification identified, and what discretion does the seller retain to substitute materials, adjust dimensions or change the plan? Where is the specification recorded at a level you could hold someone to?

What is the deposit, and what is its status? How much, when, held by whom, and under what circumstances any part of it is returnable. This deserves its own conversation, and it has one in the deposit article.

What are the contingencies? Financing, appraisal, sale of an existing home, inspection. Which are present, what are the deadlines, and what happens when one is not satisfied.

What does the contract say about time? Completion, delivery, delay and the buyer's position if the house is late. That question has enough shape to warrant reading the completion and delay article alongside it.

What inspection rights do I have? Whether you may bring your own inspector, at which stages, and on what notice. The stage that matters most is covered in the pre-drywall article.

How are disputes handled? Arbitration, venue, notice procedures, waivers, fee allocation. This is the provision buyers most often skip and most often regret skipping, and it has its own article here.

What is the warranty, and what does it require of me? Duration, coverage, exclusions, maintenance obligations, and the notice procedure a claim must follow.

What is assignable, and what is not? Whether the contract may be transferred, and any restriction on resale before or shortly after closing. If that matters to you, read the resale article too.

What am I agreeing to about affiliated services? Lender, title, escrow, insurance. Whether an incentive is conditioned on using them, and what the disclosure says about the relationship.

The pressure is real, and it is not personal

A new-home sales environment is built to move. Release dates, lot availability, incentive deadlines, a price sheet that changes on a schedule. All of that can be perfectly true and still be a bad reason to sign a document you have not read.

The calm response is a plain sentence, said once, without apology. I want my attorney to read this before I sign. Please send me the complete package.

If a house is genuinely worth buying, it is worth buying two days later. If two days genuinely cannot be found, you have learned something useful about how the rest of the transaction will run.

Your own representation, arranged early

The person in the model home represents the seller. That is the arrangement, and it is explained in the sales office article. A buyer may bring their own representative, and the timing matters more than people expect: many communities require the buyer's agent to be registered at the FIRST visit for the representation to be recognised.

So if you want someone reading the contract on your side of the table, arrange it before you walk through the door, not after.

Where to go next

Start at the new-construction hub above for the wider picture, then read the negotiation article, because what you can ask for and what the contract records are the same conversation held twice.

If you want a second set of eyes on a new-home purchase in Claremont, get in touch. Anthony Grynchal has been licensed in California since November 2009.