Buyer Beware

As I read others blogs I notice that many writers are preparing their homes to sell. I just wanted to warn others of an experience that we learned the hard way. After selling our first starter home we looked forward to buying a new, larger home. My mother worked for a bank and we had checked out the builder with the mortgage department. Our contract stated that our deposit was to be held in escrow. After signing the contract we watched the house being built and documented it step-by-step in pictures. Just before the drywall went up we had the wires run so that we could have stereo and surround sound throughout the house with no ugly wires.

We scheduled the delivery of our new washer and dryer, scheduled our time off from work with just two weeks to go before closing day. Up until just 10 days before closing, work had been steady with progress at each visit. This was the last of the work that would be done on what we thought would be our new home. One week before closing we visited to find no work done—all that remained to be done was the laying of carpet and flooring.

We contacted the builder and were told they had to complete another home and we would be closing in another two weeks. I still got nervous and after speaking with my mother she checked with her contact—no problems were connected to this builder. Another week passed with no work; now I was very nervous. That was when my mother heard the builder was having money issues and talk was beginning to circulate about bankruptcy.

We went to the office of the president of the company that built the house. He assured us they would not be filing bankruptcy. We went to a real estate attorney and were told that Virginia is not truly an escrow state. We showed him where on our contract it stated escrow, he said that just meant the money was being held, but not in our name, and if the builder needed it to pay contracters that was legal. We were also shown a line on the contract that stated that the builder could transfer the contract to someone else and that they had up to two years from the date of the contract for them to complete the contract.

These two issues meant that Virginia gives any contractor first dibs on the deposit. And we may have to wait two years to find out if we have a house and at the end we may have no house and no money.

What we should have done was made the contract with the escrow being kept under our name so the builder could not touch it. Some builders may not agree to this, but we will never go into a contract without this stipulation. We will also spend the few hundred dollars it takes to have an attorney look over the contract before we sign anything.

We would have loved to spend even $500.00 to have saved the over $13,000.00 that was lost permantely to us.

I know most people will think, I've never heard of this and it probably doesn't happen often. It is true that it doesn't happen with most house sales, but we were not the only buyers in this community to have lost. There were more than 20 homes that had been sold and were being built. The builder still had shop set up at the model home well into the time that no work was being done on the homes.

It still upsets us that the law allows this to happen to families. But, we do have a sense of humor about it—we say we should have known since the house was located on Titanic Lane.