contract on a new home - how to get out

[needhelpfast]

Illinois
we signed a contract to purchase a new home. 5 days later we called to cancel for undisclosed reasons. the subdivision and home site have not yet been started. we paid them 1500 at time of signing for earnst money and after we verbally cancelled with them, we decided to stop payment on the check. They are now coming back stating they will not give us a signed cancellation doc and they mentioned that they are still discussing legal advice to get the money back. They stated it was illegal to stop payment on the check. Please need advice on what rights we have and what else we can do. the other earnest money is due in two days and we have not secured a loan. The house would not be started to be built until October of this year 2001.
Help!

Thanks, SD



[Edited by needhelpfast on 06-18-2001 at 03:08 PM]

 

[JETX]

Regretfully, without seeing the contract you signed, no one can advise what clauses are enforcable and which (if any) are not.

However, most home purchase contracts have conditional issues, such as financing. If you were unable to obtain financing, then you might be able to void the contract (after all, the builder would certainly want to be assured of your getting financing when the house is built!).

I would suggest that you:
1) Read the contract. Look for any items that could allow or justify your termination.
2) See what the builders recourse is if you breach. This could be everything from full payment to keeping the 'earnest money' to nothing.
3) Advise the builder that your financial picture has changed 'drastically' since you entered the contract and don't believe that you could obtain financing. This could be something like 'notice from employer of possible job termination, plant closing, etc.'
4) If all else fails, talk with an attorney (or maybe you should do this early).