Earnest money refund

(Texas) I signed a contract (July 2000) to purchase a home to be built. The neighborhood was in development stage. The salesperson indicated verbally that construction should begin in October and that the lot was flat. It is now February (2001) and construction has not begun and also the lot has a major slope. To add to the situation the mortgage company that we had selected went bankrupt and is unable to close the loan. I have also been notified that I am being layed off from my employer so I don't want to throw away more money for loan application. Can I get my earnest money refunded?

[Edited by bl0105 on 02-08-2001 at 12:40 PM]

[HomeGuru]

You may have a hard time if you signed the contract based on verbal representations. Did you not take a look at the lot for yourself?

The lot was flat when we signed the contract. Our lot and the surrounding lots were built up and sloped during grading.

Anyway to get a refund based our the mortgage company bankruptcy. We were required to provide a commitment letter that is now null.

[JETX]

Basically, as I see it, you have two separate issues, either of which might cause the sales agreement to be voidable.

Take a look at the sales agreement and see what it says about funding or financing. Most home constuction contracts have a financing provision that, in the event of no financing, the contract might be voided. And since you are soon to be unemployed, the chances of obtaining financing on this note is between slim and none.

What does the sales agreement say about a start date or move-in date. Most of them give a start 'range' of a few weeks, but your claim of four months seems excessive.

Lastly, discuss your verbal understanding with the builder. Being verbal, this on its own is not sufficient to void the contract, but taken in consideration with the financing and start date problems, it could be a considered.