What to watch for in a builder contract

Builder contracts are written by the builder's attorneys and refined over thousands of sales. They're not evil, but every ambiguity leans the builder's way. These are the sections worth slowing down on before you sign.

Deposits and when they go hard

Your earnest deposit is often 5 to 10 percent, and design center orders usually require additional deposits that become nonrefundable once materials are ordered. Know the exact dollar amount you'd lose at each stage if you had to walk away, and why you'd be allowed to.

Completion dates

The contract usually gives the builder a wide delivery window and generous extension rights for weather, permits and materials, while your obligations stay firm. Ask what happens to your rate lock if delivery slips three months, and who pays for the extension. Get the answer in writing.

The substitution clause

Most contracts let the builder swap materials and fixtures for items "of equal or better quality." That clause is why the brand of windows in the model isn't a promise. If a specific item matters to you, get it named in the contract.

Financing and appraisal

Upgrades rarely appraise at what you paid for them. If you're heavy on options with a small down payment, ask your lender early how an appraisal gap gets handled, because the builder's contract usually doesn't make it their problem.

The HOA you're joining

New communities come with a developer-controlled HOA. Dues are often set artificially low while the builder controls the board and rise after turnover to the homeowners. Read the budget behind the fee before you count on it staying low.

Warranty structure

Typical coverage runs one year on workmanship, two on mechanical systems, and ten on major structure, with cosmetic issues covered for only about 30 days after closing. Note everything at the walkthrough, and calendar a full warranty list for month 11.

Have someone on your side read it

We read these contracts every week and know which terms builders will actually amend. That review is part of what the builder-paid commission covers when you register us as your agent, and half of that commission comes back to you at closing.