My builder can only obtain a 30-day temporary
certificate of occupancy due to code deficiencies noted by
the city. He claims he cannot correct deficiencies until materials
arrive that are on order. He wants to go ahead and close on
the sale. He claims he is liable, as the builder, to correct
the deficiencies. I am concerned the liability will transfer
to me upon closing. What are your thoughts, and how can I
protect myself? Thanks.
-- Suspicious Stacy
If you're looking for a brief answer on whether you should close
your deal based on the builder's promises, here it is in three
words: No, no, no! If you close and hand over your money, you
may relinquish the only leverage you have in this matter and
possibly be stuck with a home that's at least temporarily uninhabitable
and may even require thousands of dollars to fix.
While I'm not quick to refer
readers to attorneys, you need an experienced real estate
lawyer, and pronto. If you have friends or colleagues who
can recommend one, fine. Or you might go to the Web site of
Association of Consumer Advocates for the names and numbers
of legal experts in the real estate field in just about every
major market. Brief bios give their areas of expertise.
While you're waiting for
your appointment, contact the city's code-enforcement division
and ask to speak to the inspector who found the deficiencies
at the site. The inspectors are usually out most of the day,
so you'll probably have to leave a message. Note that it's
an emergency. It is -- for you!
When you do speak with the
inspector, ask how serious the new home's problems really
are, how they arose and what caused them. Realize that they
don't want to get involved in a legal controversy, so you
may have to read between the lines of the responses. Try to
get an idea of what's truly needed to fix the problems.
You may also want to call
the Better Business Bureau and ask for the track record of
the builder. And keep that phone number handy: You may have
to call them back with your complaint.
Meanwhile, take a long look
at that contract you signed with the builder. Take it with
you to the attorney's office, along with any pertinent correspondence
or records. You might have an "out" for builder
nonperformance -- assuming you can bear to part with the house.
Most contracts say the contractor must "substantially
comply" with terms of the construction agreement. If
a 30-day certificate of occupancy is the best the builder
can offer before closing, you probably have solid legal footing.
Even if the builder is indeed
liable for fixing the problems, it doesn't mean he will correct
them down the road, even if those individual deficiencies
are covered specifically in your contract and (or) by local
government requirements, says Beau Brincefield, a real estate
attorney in Alexandria, Va., and author of "Brincefield's
Guide to Buying a Home; The Twenty-One Biggest Mistakes People
Make When Buying a Home."
Many people think they're
dealing with a reputable "name" builder when they're
getting a new house, but some builders make a habit of setting
up different limited-liability subsidiaries that have no assets
from subdivision to subdivision, says Brincefield. So even
if there's a judgment against them, they may have nothing
to pay it with.
Of course, the problems in your new home
may actually be minor and the builder may fix them as soon
as materials come in. But don't count on it. Act quickly.
Be persistent and firm. Don't leave anything to chance. And