Yet Another Reason to Read the Fine Print...

I'm shaking my head at this very moment, dear Reader.

In today's Washington Post, there's a great article entitled, "If You Walk Away, Expect to Pay". The article discusses how the decline in the housing market is causing contract cancellations for new homes, and builders are feeling the hit. So, as an incentive for would-be buyers NOT to cancel, they are adding promissory notes to their contracts. The contract states that not only does a buyer rescind their right to their deposit money, but they OWE additional funds - sometimes as much as the deposit - if they back out of buying the home.

Now, if you have ever bought a home in a new development, you know that you may not even get to see the contract until you are about to sign it. The promissory note is a part of the contract, however, the builder is not obligated to point out this addition. If you don't read it, it doesn't matter - you have still signed the contract and are obligated to pay if you don't end up buying the property.

This is a HUGE oversight for homeowners who are facing foreclosure. One of the reasons people have backed out of these contracts is because they were unable to sell a home they already had. I have had several clients move back into a home they were trying to sell and cancel a contract on a new property to avoid foreclosure. But would you do so if you knew you were going to lose your deposit AND pay thousands more?

You would then be between a rock and a hard place, especially if you were looking to use the deposit money to avoid foreclosure proceedings.

The article points out options for would-be buyers who need to cancel a builder contract. Read the article, and make sure you ALWAYS read the fine print!