I signed a contract with a builder in Irvine, CA to purchase a new
house that is currently being built. Due to the declining real estate
market, I am thinking about cancelling the contract. I have put $25k
down in deposit and another $20k in deposit for upgrades.

Has anyone gone through with cancelling their new home purchase? How
did you approach the builder and what was their response? Did you get
your deposit back? What would I need in order to get all or most of my
deposit back?

Builder is California Pacific, home in Irvine, California.

I checked the contract and it had a reference to California Civil Code
Section 1675, mentioning something that the builder can only keep the
deposit up to 3% of the purchase price of the house (which amounts to
about $29k). (Contract terms below.) Any thoughts, suggestions?


------------------------------------
Contract Terminology:

"In the event of a default by buyer under this agreement, buyer and
seller agree that it would be extremely difficult and impractical to
ascertain the actual damages suffered by seller, that buyer desires to
limit the damages for which buyer may be liable as the result of a
default by buyer and that buyer and seller both desire to avoid the
costs and delays if seller commenced legal proceedings to recover its
damages resulting from buyer's default.

Therefore, in the event of a default by buyer prior to the close of
escrow, seller, as its sole and exclusive remedy, shall be entitled to
terminate this agreement, cancel the escrow and retain, as liquidated
damages, buyer's deposits under this agreement and any addendum hereto,
which amount shall be deemed to be a reasonable estimate of seller's
damages pursuant to California Civil Code Sections 1671, et seq. The
liquidated damages to be retained by seller shall be net of any
disbursements made or payable from buyer's deposits to third parties.

Notwithstanding the foregoing, if the total amount of buyer's deposits
exceeds three percent (3%) of the total purchase price of the property,
seller, at its sole discretion, shall be entitled to either: (1) retain
as liquidated damages an amount not exceeding three percent (3%) of the
total purchase price pursuant to California Civil Code Section 1675(c)
and escrow holder shall return to buyer the balance of buyer's
deposits; or (2) demand to retain as liquidated damages an amount in
excess of three percent (3%) of the total purchase price, provided
however, if buyer objects to such amount, pursuant to ...Section
1675(d) this liquidated damages provision shall be invalid unless
seller establishes in the court or arbitration proceedings provided for
herein that the amount demanded by seller as liquidated damages is
reasonable as determined in accordance with ...Section 1675(e)..."

On Mon, 14 Aug 2006 11:37:33 -0400, wrote:

I signed a contract with a builder in Irvine, CA to purchase a new
house that is currently being built. Due to the declining real estate
market, I am thinking about cancelling the contract. I have put $25k
down in deposit and another $20k in deposit for upgrades.

Declining? I still see new homes being built and snatched up.
People are buying and waiting for the next Bay Area exodus.

Why not just keep follow through and sell it?


Has anyone gone through with cancelling their new home purchase? How
did you approach the builder and what was their response? Did you get
your deposit back? What would I need in order to get all or most of my
deposit back?

Builder is California Pacific, home in Irvine, California.

I checked the contract and it had a reference to California Civil Code
Section 1675, mentioning something that the builder can only keep the
deposit up to 3% of the purchase price of the house (which amounts to
about $29k). (Contract terms below.) Any thoughts, suggestions?


------------------------------------
Contract Terminology:

"In the event of a default by buyer under this agreement, buyer and
seller agree that it would be extremely difficult and impractical to
ascertain the actual damages suffered by seller, that buyer desires to
limit the damages for which buyer may be liable as the result of a
default by buyer and that buyer and seller both desire to avoid the
costs and delays if seller commenced legal proceedings to recover its
damages resulting from buyer's default.

Therefore, in the event of a default by buyer prior to the close of
escrow, seller, as its sole and exclusive remedy, shall be entitled to
terminate this agreement, cancel the escrow and retain, as liquidated
damages, buyer's deposits under this agreement and any addendum hereto,
which amount shall be deemed to be a reasonable estimate of seller's
damages pursuant to California Civil Code Sections 1671, et seq. The
liquidated damages to be retained by seller shall be net of any
disbursements made or payable from buyer's deposits to third parties.

Notwithstanding the foregoing, if the total amount of buyer's deposits
exceeds three percent (3%) of the total purchase price of the property,
seller, at its sole discretion, shall be entitled to either: (1) retain
as liquidated damages an amount not exceeding three percent (3%) of the
total purchase price pursuant to California Civil Code Section 1675(c)
and escrow holder shall return to buyer the balance of buyer's
deposits; or (2) demand to retain as liquidated damages an amount in
excess of three percent (3%) of the total purchase price, provided
however, if buyer objects to such amount, pursuant to ...Section
1675(d) this liquidated damages provision shall be invalid unless
seller establishes in the court or arbitration proceedings provided for
herein that the amount demanded by seller as liquidated damages is
reasonable as determined in accordance with ...Section 1675(e)..."

--
Posted via a free Usenet account from http://www.teranews.com

writes:

I signed a contract with a builder in Irvine, CA to purchase a new
house that is currently being built. Due to the declining real estate
market, I am thinking about cancelling the contract. I have put $25k
down in deposit and another $20k in deposit for upgrades.

Has anyone gone through with cancelling their new home purchase? How
did you approach the builder and what was their response? Did you get
your deposit back? What would I need in order to get all or most of my
deposit back?

Builder is California Pacific, home in Irvine, California.

I checked the contract and it had a reference to California Civil Code
Section 1675, mentioning something that the builder can only keep the
deposit up to 3% of the purchase price of the house (which amounts to
about $29k). (Contract terms below.) Any thoughts, suggestions?

Don't think the builder is worried about that declining real estate
market and their capital investment in the site too. Expect to lose
that full 3% if you bail.

You'll want a real estate attorney to help you with this. Don't
expect the builder to do anything but paint doomsday scenarios and try
to soak you for that full $45k or threaten worse. As the wording
states below, it looks like they'll try to soak you for as much as
you'll let them, and that you'll probably have to strenuously object
to cap your loss at 3%.

I've had friends get out of builder contracts like this, and it's
never been a fiscally or emotionally happy thing.

Good luck.

Best Regards,
--
Todd H.
http://www.toddh.net/

I signed a contract with a builder in Irvine, CA to purchase a new
house that is currently being built. Due to the declining real estate
market, I am thinking about cancelling the contract.

If the real estate market had gone up, and the builder had wanted to
cancel the contract, would you have let them?

Based on the 3% language that you post, you might get back $45k-$29k =
$16k. More than that? I don't know, there might be an out for you
but I wouldn't count on it.

Are you working with a buyer's real estate agent? If not, you might
think about doing so (although I guess that would be for your next
transaction, rather than this one). They aren't lawyers but they do
tend to be relatively knowledgeable about real estate and various
things which can happen. I had good luck finding one through
http://www.naeba.org

Given that $29k (or so) is at stake, seems like it would be worth
consulting a real estate lawyer. An initial interview may be free, or
even if you pay a few hundred bucks for advice, it doesn't seem out of
line relative to how much it might save you if there is some way for
you to get out of this.

In article ,
wrote:

I signed a contract with a builder in Irvine, CA to purchase a new
house that is currently being built. Due to the declining real estate
market, I am thinking about cancelling the contract. I have put $25k
down in deposit and another $20k in deposit for upgrades.

Has anyone gone through with cancelling their new home purchase? How
did you approach the builder and what was their response? Did you get
your deposit back? What would I need in order to get all or most of my
deposit back?

How about asking the contractor what it would take to get out
of the contract? After all, the contractor is in the driver's
seat right now with your $45,000 dollars. If the contractor
has other buyers, you might get off easy. If buyers are hard
to find, you likely own a house or will have to pay all of the
$45K to get out of the deal. If you are serious about trying
to get your, your best bet is to retain a real estate attorney.

-john-

--
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John A. Weeks III 952-432-2708
Newave Communications http://www.johnweeks.com
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