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Termination of Purchase Agreement

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Hawkeye2006

Junior Member
What is the name of your state? Indiana

My wife and I signed a purchase agreement in July 2006 to build a home. After failing to find a mortgage that was in our price range, we signed Termination of Purchase Agreement paperwork. At this point, we aren't even fighting for our $500 escrow money, we just are sick of the builders and want out. Their corporate office has informed us that they "are not accepting our desire to terminate" and are threatening arbitration. At the time we signed and submitted our Termination paperwork, the house was only in the drafting phase and no construction has begun. Also, if we go to arbitration and lose, we are responsible for paying the builders court costs and lawyers fees. Do we have a fighting chance of getting out of this or are we a victim?
 


Buk1000

Member
Does the contract say you have to arbitrate disputes about this particular issue? Most builders contracts have an arbitration clause. IMO it is almost always going to favor the builder. This is particularly so if the contract says the arbitrator must be so-and-so, often an entity who has a clear interest in the outcome. Conflict of interest. Though it is too late to help you, for future reference, always have a good attorney review any builder's contract before you sign. A good, experienced attorney could've advised you to strike the arbitration clause at least.

Good luck getting out of this. I have a feeling that with the housing market cooling in most areas builders will be more desperate than ever to keep buyers' money or keep them in the contract or extract damages from them. Unless you have some good reason to get out, they may have the upper hand here, all the way. The usual reason to get out of it was that you failed to obtain financing. But if you DECIDE not to pursue getting financing or just want out, it becomes a lot harder. Since they didn't start construction you can't even claim defective work. But, you might be able to find out fi the builder has a history of bad construction and predatory lending, and use that to your advantage.

You will need to hire an attorney unless the builder is just bluffing and gives up, and somehow I doubt that they're bluffing. If you have the opportunity to get out with only a $500 loss take the opportunity and run.
 

demartian

Member
Not Sure About Indiana

My state, TN requires a clause in those contracts that if the buyers are unable to secure a loan, the contract is null and void. The house I sold in NY had the same clause as well. Read through that contract, there may be something in there about obtaining a loan.
 

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