Expert Advice When You Need It Most

Am I in default with Builder?

Asked over 2 years ago - Naperville, IL

I signed a contract with a builder last year. The house is almost complete and it appears I will not be able to sell my condo on time as the economy has taken a major nose dive (after signing the contract). Homes comparable are selling for 25k less than what I owe. To rent my place out, I would need a cosigner which I do not have. I obviously cannot get another mortgage. If I get denied by several different banks (which I will), am I still in default?

Additional information
The contract states I would be in default if I fail to
Make any payment required under the agreement (which I did)
Make a mortgage application or material selections as required in this agreement (which I did)
Close as scheduled (cant close if I cannot get a mortgage)
Properly disclose all requested credit info, including any facts that could result in a denial for
of Mortgage approval (I have been in contact with the sales rep throughout the process)
comply with the illinois real estate transfer tax act
perform any of the obligations required by me

Flag

Save

Share with:

Attorney answers (2)

David C. Ansani

Reputation Level 9

Answered over 2 years ago.

Flag

From what you say, you are already or will soon be in default. As a practical matter, your best bet is to try to get the builder to agree to work with you so that you can get more time to sell your condo. Remember, they probably want you to close and buy the house. Did you get denied for loan within any mortgage contingency period in the contract with the builder and follow the process for reporting that to the builder? You should have the contract reviewed by an attorney to give a clear idea of your rights.

NOTE: This answer was prepared for discussion purposes only. By using this site you understand and agree that there is no attorney client relationship or confidentiality between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your jurisdiction and with whom you have an attorney client relationship. The law varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question or omitted from the question.

Mark as good answer

Add comment

Mazyar Malek Hedayat

Reputation Level 12

Answered over 2 years ago. Bankruptcy Attorney in Lockport, IL.

Flag

Your question is whether you are in default under your contract with a builder. Based on what you've written, you technically already are in default. But you may also be able to work through that default after talking it over with the builder, or even find an "out" clause in the contract itself. I have a lot of experience with builder agreements, having written and reviewed a lot of them. It would help to take a look at this one before drawing any further conclusions. Long story short, you should be proactive in this situation. Waiting will just make things worse: that is the "catch" with real-estate and construction contracts - they require you to be proactive or else stand in a very weak position. And bargaining from a position of weakness is not a good proposition.

I hope this information was helpful. Feel free to contact our office to follow up.

My Website

Mark as good answer

Add comment