New Construction Contracts: The Power Imbalance
New home builder contracts are drafted by the builder's attorneys and heavily favor the builder. They include arbitration clauses, limited warranties, damage caps, change order provisions that can raise your price without meaningful consent, and delayed closing provisions. Understanding what you signed—and negotiating key terms before signing—is essential. Once you've signed the builder's standard contract, your leverage is significantly reduced.
Delays and Delayed Closing
Builder contracts almost always include broad force majeure provisions allowing extensions for weather, material delays, labor shortages, and other circumstances largely beyond the buyer's control. Buyers whose lease is ending, whose furniture is in storage, or who are otherwise counting on an occupancy date often find themselves extending their interim housing arrangements repeatedly with no recourse. Review your contract's force majeure clause and closing date provisions carefully before signing; negotiate a meaningful deadline with a buyer remedy (price reduction, walking rights after a certain period) if possible.
Punch List Disputes
The punch list—the list of incomplete items or corrections identified at the pre-closing walk-through—should be completed before you close. Builders often pressure buyers to close before punch list items are addressed, promising to complete them afterward. Once you close, your leverage evaporates. Retain closing on incomplete or unsatisfactory items; at minimum, negotiate a repair escrow held by the title company pending completion. Get all punch list items documented in writing signed by the builder's representative.
Warranty Claims After Closing
Document any post-closing defects in writing immediately and submit formal warranty claims per the warranty's written procedure. Keep copies of all correspondence. If the builder denies warranty claims or fails to respond, escalate through the warranty's dispute resolution process before threatening litigation. Most states' right-to-repair statutes require written notice and an opportunity for the builder to repair before you can sue. Failure to follow these procedures can result in dismissal of your lawsuit and waiver of claims.
Get a new construction dispute evaluated →
Discuss your case with Yates Anderson
Yates Anderson represents clients in Alabama, Florida, and beyond. Our attorneys handle complex disputes with the rigor of a national firm and the agility of a boutique. Request a case evaluation and an attorney will respond within one business day.
Frequently asked questions
Can I negotiate a new home builder's standard contract?
Yes, though national production builders negotiate less than custom builders. Negotiable items often include: the price; included upgrades; lot premiums; closing cost contributions; interest rate locks or buydowns; and termination provisions if the builder delays significantly. Legal terms (arbitration, limited warranty) are harder to negotiate with large builders but worth attempting. Having a real estate attorney review the contract before signing is money well spent.
Can I use my own real estate agent with a new home purchase?
Yes, and it is usually in your best interest to do so. The builder's sales agent works for the builder, not you. Your own buyer's agent represents your interests, helps you understand the contract and process, and typically earns a commission from the builder (not you). Bring your agent to the very first visit to the model home—some builders refuse to co-operate with agents introduced later in the process.
What if my new home had problems the builder refuses to acknowledge?
Get an independent home inspection (even for new construction) and document all defects in writing. Submit formal warranty claims and preserve all builder communications. If the builder denies claims, consult a construction defect attorney. Arbitration clauses in builder contracts typically require pre-litigation notice and the right-to-repair process before arbitration can begin. Acting methodically and preserving documentation dramatically improves your position.