Builder Closed for a price now broker expect overage money returned

[smutlydog]

Texas
I had a contract to build a home for a price and closed for that price. The next day my brokers calls for a meeting and tells me I have to pay back all the overage money I received which was roughly $24,000. I am suppose to pay it back to the buyer because that amount went over the contract sales price. We give the customers budgets for items like for example $1.20 a square foot for tile. If they want higher quality they pay me overage costs. And by the way I did not profit from the overages. So over time I received checks for various upgrades. Here is something else interesting. The lender funding usually gets transferred via title company into my business account hours after closing but this time that didn't happen. My broker ends up with my check and ask me to write the check for $24,000. I have done this numerous time and its never worked this way. This contract looks just like all the others. I don't want to write him this check. What should I do?

 

[Ohiogal]

You need an attorney to review the contract you signed which is something this forum cannot do.

 

[adjusterjack]

Agree. Lawyer time.

 

[quincy]

Texas
I had a contract to build a home for a price and closed for that price. The next day my brokers calls for a meeting and tells me I have to pay back all the overage money I received which was roughly $24,000. I am suppose to pay it back to the buyer because that amount went over the contract sales price. We give the customers budgets for items like for example $1.20 a square foot for tile. If they want higher quality they pay me overage costs. And by the way I did not profit from the overages. So over time I received checks for various upgrades. Here is something else interesting. The lender funding usually gets transferred via title company into my business account hours after closing but this time that didn't happen. My broker ends up with my check and ask me to write the check for $24,000. I have done this numerous time and its never worked this way. This contract looks just like all the others. I don't want to write him this check. What should I do?

If you closed on a price that did not include the $24,000 overage, and you did not have a separate contract or an addendum to the contract signed by the the buyer for the upgrades, you probably need to write that check. But I agree with the others that a review of the contract(s) that were signed is necessary. See an attorney in your area.

 

[LdiJ]

If you closed on a price that did not include the $24,000 overage, and you did not have a separate contract or an addendum to the contract signed by the the buyer for the upgrades, you probably need to write that check. But I agree with the others that a review of the contract(s) that were signed is necessary. See an attorney in your area.

I agree that he might owe the money but being asked to write a check rather than everything being dealt with at closing is more than a bit odd. So is his check being given to his broker. I definitely echo the advice to consult an attorney. Something is off here.

 

[smutlydog]

I agree that he might owe the money but being asked to write a check rather than everything being dealt with at closing is more than a bit odd. So is his check being given to his broker. I definitely echo the advice to consult an attorney. Something is off here.

The buyer doesn't have a realtor. I am the builder and I am being asked to asked to write the check by my broker to the customer. The thing is. I never authorized the broker to negotiate for a lower price. My broker is telling me the price was $450,000 but the contract was $475,000 which was on the closing documents. The brokers excuse was that the customer didn't exhaust all his potential overages so I owe $25,000. Some overages the customer paid for directly and some he gave me checks for. He is telling me the base price was $425,000. I am like what???I would go broke selling homes this caliber at that for that price.

 

[LdiJ]

The buyer doesn't have a realtor. I am the builder and I am being asked to asked to write the check by my broker to the customer. The thing is. I never authorized the broker to negotiate for a lower price. My broker is telling me the price was $450,000 but the contract was $475,000 which was on the closing documents. The brokers excuse was that the customer didn't exhaust all his potential overages so I owe $25,000. Some overages the customer paid for directly and some he gave me checks for. He is telling me the base price was $425,000. I am like what???I would go broke selling homes this caliber at that for that price.

What justification is your broker giving for saying the price was $450,000 when you pointed out that the contract says $475,000? Again, it sounds a bit odd...particularly considering that someone gave the check to your broker instead of transferring the money directly to you.

 

[smutlydog]

What justification is your broker giving for saying the price was $450,000 when you pointed out that the contract says $475,000? Again, it sounds a bit odd...particularly considering that someone gave the check to your broker instead of transferring the money directly to you.

At closing the title company told me to expect electronic transfer of funding hours after closing. That's how it has always worked. It never happened. The next day my broker calls me into his office with this bs.

 

[quincy]

At closing the title company told me to expect electronic transfer of funding hours after closing. That's how it has always worked. It never happened. The next day my broker calls me into his office with this bs.

Have the contract, and the facts that led to this unusual request by your broker, personally reviewed by an attorney in your area.

It sounds to me like there were changes made to the building plans that did not go through the broker first. But whatever the case is, your arguments against paying the buyer $24,000 probably will need to be found in the written contract rather than any side agreements made with the buyer that were not reduced to writing and dated and signed by all parties.

Good luck.

 

[LdiJ]

At closing the title company told me to expect electronic transfer of funding hours after closing. That's how it has always worked. It never happened. The next day my broker calls me into his office with this bs.

Get an attorney involved and let your broker know that you are doing so. Also let the title company know that you are getting an attorney involved since they allowed your broker to redirect the money without your authorization. Something smells here. If the buyer had an issue with things it should have been addressed at closing. If any party to the transaction had an issue it should have been addressed at closing. Asking you to write a check to the buyer is NOT normal practice.

 

[quincy]

I don’t think it entirely normal to have the buyer pay the builder directly for the upgrades either. If at closing the buyer discovered that the upgrades already paid for by separate checks to smutlydog were included in the closing costs (in other words, buyer was paying twice), that would be good reason for the broker to require repayment.

The whole situation is confusing but a local attorney should be able to make some sense of it.

 

[LdiJ]

I don’t think it entirely normal to have the buyer pay the builder directly for the upgrades either. If at closing the buyer discovered that the upgrades already paid for by separate checks to smutlydog were included in the closing costs (in other words, buyer was paying twice), that would be good reason for the broker to require repayment.

The whole situation is confusing but a local attorney should be able to make some sense of it.

It's not unheard of for the buyer to pay directly for upgrades. If you had any experience in that area you would know why a builder might require that, lol.

Yes, double billing is possible but it should have been addressed at closing, not after the buyer has signed off on everything...and the broker should not have been the one addressing it at closing either, and certainly shouldn't be after. Closing sometimes don't happen or get postponed due to financial disputes. I can imagine virtually no scenario where a buyer could prevail AFTER signing all of the paperwork.

And again, the broker would not have been involved in financial disputes nor should the broker be able to redirect the funds after closing.

 

[quincy]

It's not unheard of for the buyer to pay directly for upgrades. If you had any experience in that area you would know why a builder might require that, lol.

Yes, double billing is possible but it should have been addressed at closing, not after the buyer has signed off on everything...and the broker should not have been the one addressing it at closing either, and certainly shouldn't be after. Closing sometimes don't happen or get postponed due to financial disputes. I can imagine virtually no scenario where a buyer could prevail AFTER signing all of the paperwork.

And again, the broker would not have been involved in financial disputes nor should the broker be able to redirect the funds after closing.

I agree that something seems off here - but it is difficult to understand just what it is that is off.

I have been involved in dozens of closings and almost all of them have had last minute issues. Although the issues are generally minor they often center on the disbursement of funds or check errors.

 

[LdiJ]

I agree that something seems off here - but it is difficult to understand just what it is that is off.

I have been involved in dozens of closings and almost all of them have had last minute issues. Although the issues are generally minor they often center on the disbursement of funds or check errors.

Yes, it is very common to have issues arise at closing. Have you ever had one arise AFTER closing? After all parties have signed off on all docs?

 

[quincy]

Yes, it is very common to have issues arise at closing. Have you ever had one arise AFTER closing? After all parties have signed off on all docs?

No.