Tips for Purchasing New Construction Condo or House

Buying a new construction house or condo? Over the years, savvy real estate agents have referred their buyers of new construction to my law office to review and explain the New Construction Purchase Agreement *before* their buyer signs the contract. That is because custom drafted New Construction Purchase Agreements contain terms very different from the C.A.R forms for the purchase of existing homes.

With the CAR Forms, agents can receive extensive continuing education training on how to interpret and navigate the forms. Whereas “Custom” drafted forms are drafted by the Developer’s real estate attorneys. I have yet to review two that were identical.

Every such custom drafted contract I have reviewed contains draconian terms that greatly restrict the buyer’s rights during and post close of escrow.

Said agreements are drafted by attorneys specifically hired by the Developer to protect the Developer seller against potential future claims brought by buyers. That attorney owes the Developer a fiduciary duty of care, including protecting them from exposure and liability for construction defect despite California laws seemingly drafted to protect consumers.

These contracts are NOT buyer friendly. I’ve seen buyers in dispute over their Deposit because they failed to object to an item or the contract had NO inspection contingency. Neither the buyer nor their agent picked up on the fact that the contract contained NO such contingency.

Most such custom contracts lack the generous terms and contingencies that the CAR forms offer.

For example, the current CAR purchase agreement for existing homes provides an “active” removal of contingencies, which means a buyer HAS their inspection and due diligence contingencies open until they actually remove them in writing. Did you know that it’s the exact opposite in most new home construction purchase agreements?

Agents owe buyers a fiduciary duty of care, which includes referral to a competent real estate attorney when faced with a brand new custom drafted Contract they have never seen before.

After all, you are purchasing an asset worth several hundred thousand dollars or millions.

Invest some time in researching an attorney familiar with this area of California real estate law and brokerage law. Retain one to protect your rights and guide you. The Seller already did.

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