Can the builder do this - who's responsible?

[edt333]

At the end of April, we signed a contract in Virginia for a house under consrtruction due to be finished in late June. A previous contract on the house had fallen through, and the sales agent offered the nearly completed house to us at the original price.

Just yesterday, we found out that the builder refused to sign our contract, saying he had never authorized the sales agent to release the house at the old price, and that he had just fired the entire sales office. About 1 1/2 weeks ago, we received a phone call from the sales office saying OUR house would be ready around May 30. Just 2 days ago, I was at the sales office asking questions about MY house, and the sales agent gave no clue that something might be wrong. The builder says he told the sales agent he was rejecting our offer over a week ago. And the builder said that he has another contract now on this house, which much have been prepared by the sales agent I talked to.

At this point, we will lose a lot of money over this as we only sold our current house in a hurry because of the contract on the new one, we'll have to get a new loan at CURRENT, higher interest rates (we already secured a locked loan on the new house), home prices have risen, etc.

Our realtor has talked to the builder, who will only say that he didn't do anything wrong since he never signed the contract.

Is anyone responsible for any of our losses?

 

[Tracey]

Go forth and hire a real estate attorney tomorrow.

Issues:
Was the sales agent empowered to accept offers on behalf of the builder?
Was it reasonable for you to rely on the agent's references to your house without seeing a signed purchase contract?
Did the realtor hold herself out as builder's agent even though she wasn't?
Is doing so binding on the builder?
Do you get to sue the realtor for falsely holding herself out as an agent?

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This is not legal advice and you are not my client. Double check everything with your own attorney and your state's laws.

 

[edt333]

Thank you for your reply.

A few misc. details: the builder's sales manager who wrote the contract has an expired real estate license, so I guess she must have been an employee of the builder. Our deposit check (uncashed) submitted with the contract is nowhere to be found by the sales office/builder - they recommended that we stop payment, which we did, but that isn't the point!, and the house is now sold to someone else.

A few further questions:
1. We have contacted 1 attorney, who told us approx. what it would cost to find out if this is worth pursuing (initial investigation, opinion letter). At the time, I didn't know enough to ask if this type of case is ever done on a contingency basis?? We are dealing with very limited funds to pursue this, since we are now in such a poor buying position.

2. Does it make any difference that the builder is in a different state?

3. Our realtor who sold our house was also acting as a buyer's agent for us. Would her realty company ever cover any of the costs associated with such a lawsuit?

Sorry this is so long and thanks for any further advice!

 

[Tracey]

1. A contingency fee is probably forbidden in cases like this. Why are you in a poor buying position now? You got your money back.

2. Maybe. Depends on which state's laws control. You probably have diversity jurisdiction and can sue in federal court (better, more educated juries).

3. I doubt it, but you can demand they do so and see if they blink.

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This is not legal advice and you are not my client. Double check everything with your own attorney and your state's laws.

 

[edt333]

Thank you very much for your reply! I really appreciate it!

In answer to your question, the reason we are now in a poor buying position is: 1) we had already locked in our rate on our loan several weeks ago, which was before rates went up, so now that rates are up we can buy less house; and 2) the market is crazy where we live right now - a house that cost about $260,000 in April costs $325-$349,000 now, and I'm not exaggerating! There is virtually nothing left in our price range.