D.R. Horton Purchase Agreement: What to Know Before You Sign

D.R. Horton, Inc. (NYSE: DHI) is the largest homebuilder in the United States by volume. The company closes approximately 90,000 homes per year across 33 states, generating over $36 billion in annual revenue. For hundreds of thousands of American families, D.R. Horton is the first and only builder they will ever work with. What most of those families do not realize until it is too late is that the purchase agreement they are asked to sign was drafted by D.R. Horton’s attorneys to protect D.R. Horton, not the buyer.

That is not speculation. It is the nature of any contract drafted by one party and presented to another on a take-it-or-leave-it basis. In contract law, these are called contracts of adhesion. The buyer has no meaningful ability to negotiate terms. The sales agent will tell you this is all “standard language.” That phrase should concern you, not reassure you.

This guide walks through the most consequential clauses in D.R. Horton’s standard purchase agreement, explains what each one means in plain English, and documents what has happened to buyers who discovered these provisions too late. Every clause referenced below has been identified through contract analysis and corroborated by court filings. For the full builder profile, including all documented contract patterns and state-specific analysis, see the D.R. Horton builder profile.

The Clauses That Matter Most

Implied Warranty of Habitability Waiver

In most states, when a builder sells you a new home, the law implies a warranty that the home is fit for human habitation. You do not have to negotiate for this protection. It exists automatically because courts have recognized that buyers cannot inspect hidden defects in framing, plumbing, or electrical systems the way a builder can. In a recent D.R. Horton Maryland contract reviewed by Fine Print Homes, an implied warranty waiver at Section 14(c) asks the buyer to waive this protection entirely. Section numbering varies across D.R. Horton contracts, but the clause typically appears in the warranty provisions of the agreement.

In plain English, this means you are agreeing that D.R. Horton makes no promise the home will be safe to live in. If the foundation cracks, if the roof leaks on day one, if the HVAC system fails to heat the house in winter, D.R. Horton’s position is that you agreed to accept the home without that guarantee. The only warranty you receive is whatever limited express warranty D.R. Horton chooses to provide, which is controlled entirely by their own terms and timelines.

The enforceability of this waiver varies by state. In South Carolina, the Supreme Court found it unconscionable. In Texas, there is no statutory implied warranty of habitability for new construction, making the waiver largely moot. In Florida, courts recognize an implied warranty established in Gable v. Silver (1972), and contractual waivers may be found unenforceable. For a full state-by-state analysis, see the D.R. Horton habitability waiver clause page and our habitability waiver explainer.

Mandatory Binding Arbitration

In the contract we reviewed, an arbitration clause at Section 15 requires all disputes to be resolved through binding arbitration rather than in court. This means you give up your right to a jury trial, your right to participate in a class action, and your right to appeal. The arbitration provider, rules, and location are typically selected by the builder. Arbitration proceedings are private, meaning other buyers will never learn about your case or the pattern of defects you experienced.

Mandatory arbitration clauses are common in consumer contracts, but their presence in homebuilding agreements is particularly consequential. A home is the largest purchase most people will ever make, and construction defects can cost tens of thousands of dollars to repair. When the contract routes those disputes into a private forum that the builder selected, with no right of appeal, the balance of power shifts decisively in the builder’s favor. For more on how mandatory arbitration works in new construction, see our clause explainer.

Class Action Waiver

Closely related to the arbitration clause, D.R. Horton’s contract includes a class action waiver that prevents buyers from joining together to pursue claims collectively. This means that even when hundreds of homeowners in a community experience the same construction defect—the same undersized HVAC systems, the same foundation cracking, the same mold from improper moisture barriers—each buyer must fight individually, in private arbitration, at their own expense. For most individual defects, the cost of pursuing an arbitration claim exceeds the cost of simply paying for repairs out of pocket. The class action waiver ensures the builder never faces the cumulative financial exposure of its construction practices.

Complete Deposit Forfeiture

In the contract we reviewed, a deposit forfeiture clause at Section 18(a) provides that if the buyer fails to close for any reason, D.R. Horton may retain the entire earnest money deposit as liquidated damages. There is no sliding scale. There is no good-faith exception for buyers who discover material defects during the final walkthrough. If you put down $10,000 and decide not to close because the home has visible construction problems, D.R. Horton’s contract gives them the right to keep every dollar. For a deeper analysis of how deposit forfeiture clauses work across builders, see our dedicated guide.

Daily Closing Penalty

In the contract we reviewed, a daily closing penalty at Section 16(d) imposes a per-day charge if the buyer fails to close on the scheduled date. The amount is typically calculated at a rate that can equate to roughly 1% of the purchase price. On a $400,000 home, that is $4,000 per day. The penalty accrues regardless of whether the home is ready, whether your financing has been finalized, or whether outstanding punch-list items have been addressed—so the financial cost of delay compounds even when the cause sits on the builder’s side of the transaction. Combined with the deposit forfeiture clause, the buyer faces financial penalties for both closing late and walking away.

Limitation of Liability / No Monetary Damages

D.R. Horton’s contract includes language stating the builder “shall not be liable for monetary damages of any kind.” This provision, struck down by the South Carolina Supreme Court in Smith v. D.R. Horton, attempts to eliminate the buyer’s ability to recover financial compensation even if the builder is found at fault for construction defects, delays, or contract breaches. Combined with the arbitration clause and class action waiver, this creates a framework in which the buyer has virtually no meaningful remedy for builder misconduct. See the liability limitation clause analysis for state-specific enforceability.

Material Substitution Rights

The agreement grants D.R. Horton the right to substitute materials, fixtures, and finishes with alternatives the builder deems comparable, without the buyer’s consent. In practice, this means the granite countertops in your model home walkthrough could become engineered stone, the hardwood floors could become vinyl plank, and the brand-name appliances could become builder-grade equivalents. The buyer has no contractual right to reject these substitutions or to receive a price adjustment. For more on this pattern, see the material substitution clause explainer.

Independent Inspection Restriction

The contract limits when, how, or whether the buyer can hire an independent home inspector during construction or before closing. Without independent verification, buyers rely entirely on the builder’s own quality control to identify defects. D.R. Horton conducts its own inspections at various stages, but these are performed by the builder or its agents—not by someone working for the buyer. The new construction checklist recommends scheduling independent inspections at the pre-drywall stage and again before closing, regardless of what the contract says.

Biological Contamination Release

In the contract we reviewed, a release of liability at Section 28(b) covers biological contamination, including mold. This provision asks the buyer to acknowledge that the builder is not responsible for mold or other biological growth that may occur in the home. Given that construction defects such as improper moisture barriers, inadequate ventilation, and plumbing leaks are among the primary causes of residential mold, this clause effectively allows the builder to disclaim responsibility for a problem that the builder’s own workmanship may have caused. The Louisiana class action involving HVAC-related mold in D.R. Horton homes underscores why this clause matters.

What the Courts Have Said

These clauses are not hypothetical concerns. Buyers across the country have challenged them in court, and the outcomes reveal how seriously judges take these provisions.

The South Carolina Supreme Court found that D.R. Horton’s no-monetary-damages clause and habitability waiver were unconscionable as a matter of law. — Smith v. D.R. Horton, 417 S.C. 42 (2016)

As documented in Smith v. D.R. Horton, 417 S.C. 42 (2016), the South Carolina Supreme Court examined D.R. Horton’s contract provisions and found them unconscionable. The case involved homeowners whose homes suffered from significant construction defects, including structural and water intrusion problems. The court held that the contract’s attempt to waive the implied warranty of habitability and eliminate the buyer’s right to monetary damages was both procedurally and substantively unconscionable. The ruling established that builders cannot simply draft away a buyer’s fundamental protections through adhesion contracts, at least in South Carolina.

According to court filings in Robinson v. D.R. Horton, Case No. 2:25-cv-02394 (D. Nev. 2025), a class action lawsuit was filed in federal court in Nevada alleging a RICO (Racketeer Influenced and Corrupt Organizations Act) scheme involving D.R. Horton and its mortgage subsidiary, DHI Mortgage. The plaintiffs allege what they describe as a “Monthly Payment Suppression Scheme,” in which D.R. Horton allegedly steered buyers toward DHI Mortgage using artificially low initial payment estimates, then adjusted the true costs at or near closing when the buyer was already financially and contractually committed. The case is ongoing.

A related case, Santiago v. D.R. Horton (M.D. Fla. 2025), alleges that the plaintiff’s monthly mortgage payments increased by nearly $1,000 less than a year after closing. The complaint alleges that D.R. Horton and DHI Mortgage structured the transaction to conceal the true cost of homeownership through temporary rate buydowns and incomplete escrow estimates. Both cases are being pursued under RICO and state consumer protection statutes.

In Louisiana, a class action was filed by homeowners alleging that HVAC systems installed by D.R. Horton were undersized and incapable of handling the region’s humidity, leading to persistent mold problems throughout their homes. When the homeowners sought to bring their claims collectively, D.R. Horton moved to compel individual arbitration under the mandatory arbitration clause in their purchase agreements. The judge denied the motion, allowing the case to proceed in court. The case illustrates how the arbitration provision functions in practice: even when dozens of homeowners experience the same defect from the same builder, the arbitration provision routes each buyer into an individual proceeding in a private forum, separate from every other affected homeowner.

As documented in Nagano v. D.R. Horton, a class action filed in Hawaii, homeowners allege that D.R. Horton used defective galvanized metal foundation components that corrode in Hawaii’s tropical climate, compromising the structural integrity of their homes. The class was certified in January 2024, and trial is currently set for July 2026. The alleged defect pattern raises questions about whether D.R. Horton used cost-effective materials that were unsuitable for the specific environmental conditions of the homes they were building.

In Alabama, 88 homeowners filed suit alleging that their D.R. Horton homes were marketed and sold as meeting Gold Fortified hurricane resistance standards, a designation that provides insurance premium discounts and is particularly important in Gulf Coast states. According to the complaint, the homes did not actually meet those standards. The homeowners allege they paid premium prices for hurricane-resistant construction they did not receive, while also being exposed to greater storm damage risk than they were led to believe.

D.R. Horton also agreed to a $16.1 million class action settlement in South Carolina to resolve claims related to widespread construction defects in multiple communities. According to Violation Tracker, this represents one of the larger residential construction settlements in the state’s history.

The Warranty Cost Gap

In June 2025, Hunterbrook Media published a long-form investigation titled “House from Hell,” which interviewed more than 60 homeowners across 16 states who purchased D.R. Horton homes. The investigation documented a consistent pattern: homeowners reported construction defects ranging from cracked foundations and roof leaks to improperly graded lots that flooded during ordinary rain events.

According to SEC filings analyzed by Hunterbrook, D.R. Horton sets aside approximately $2,348 per home in warranty reserves — while actual repair costs for defective homes were estimated between $5,000 and $20,000.

That gap between reserved warranty costs and actual repair costs is significant. It suggests a business model in which the builder’s warranty program is not designed to fully remediate construction defects, but rather to manage the financial exposure of those defects at the corporate level. When a homeowner’s repair costs exceed the warranty reserve, the homeowner bears the difference. Combined with the contractual provisions that waive the implied warranty of habitability and route disputes into private arbitration, the buyer has limited recourse.

The Hunterbrook investigation also noted that D.R. Horton’s volume-driven model creates inherent tension between speed and quality. Building 90,000 homes per year requires aggressive construction timelines, heavy reliance on subcontractors, and standardized processes that may not account for local soil conditions, climate variations, or regional building code requirements. The purchase agreement’s material substitution clause and biological contamination release take on additional weight in this context: they are not just legal boilerplate, but operational tools that allow the builder to manage costs and limit liability at scale.

DHI Mortgage and Payment Suppression

D.R. Horton operates an affiliated lending subsidiary called DHI Mortgage, headquartered in Arlington, Texas. DHI Mortgage provides mortgage financing to a significant share of D.R. Horton buyers. According to D.R. Horton’s SEC filings, the company’s financial services segment—which includes DHI Mortgage—generates substantial revenue by capturing both the homebuilding margin and the mortgage origination margin on the same transaction.

The integration of homebuilding and mortgage lending under one corporate umbrella creates inherent conflicts of interest. D.R. Horton’s sales process typically includes incentives for using DHI Mortgage, such as closing cost credits, rate buydowns, or design center allowances. These incentives may disappear or be reduced if the buyer chooses an outside lender. In practice, this creates financial pressure to use the in-house lender even if better terms are available elsewhere.

The Payment Suppression Allegations

Two active federal lawsuits allege that DHI Mortgage engaged in what plaintiffs describe as a “Monthly Payment Suppression Scheme.” In Robinson v. D.R. Horton (D. Nev. 2025), plaintiffs represented by Clarkson Law Firm, Varnell & Warwick, and the National Consumer Law Center allege that DHI Mortgage presented buyers with artificially low monthly payment estimates by temporarily buying down interest rates and omitting escrow costs including property taxes and homeowner’s insurance.

According to the Robinson complaint, buyers were shown initial monthly payment estimates during the sales process that appeared affordable, only to discover after closing that the actual monthly payment—once the temporary buydown expired and taxes and insurance were properly escrowed—was significantly higher. The complaint alleges that by the time buyers learned the true cost, they had already signed the purchase agreement, paid their earnest money, and were contractually committed.

In Santiago v. D.R. Horton (M.D. Fla. 2025), the plaintiff alleges that monthly mortgage payments increased by nearly $1,000 less than a year after closing. The complaint pursues RICO claims, alleging that D.R. Horton and DHI Mortgage structured the transaction to conceal the true cost of homeownership.

These cases are ongoing and the allegations have not been proven in court. However, they underscore why buyers should independently verify monthly payment estimates. At minimum, buyers should request a Loan Estimate from DHI Mortgage and compare it side-by-side with estimates from at least two independent lenders. All estimates should include property taxes, homeowner’s insurance, HOA fees, and any mortgage insurance premiums.

D.R. Horton Earnest Money and Deposit Forfeiture

One of the most common questions from prospective D.R. Horton buyers is about earnest money—how much is required, and what happens to it if you need to cancel. The answers are in the purchase agreement, but they are often not clearly communicated during the sales process.

How Much Earnest Money Does D.R. Horton Require?

Earnest money deposits for D.R. Horton homes typically range from $1,000 to $10,000 or more, depending on the market, home price, and whether the home is a pre-sale (to be built) or standing inventory. In competitive markets, deposits may be higher. The exact amount is specified in the purchase agreement, and it is due at the time of contract signing.

Is the Deposit Refundable?

Under D.R. Horton’s purchase agreements, the earnest money deposit is generally not refundable if the buyer fails to close. In the contract we reviewed, a deposit forfeiture clause at Section 18(a) provides that D.R. Horton may retain the entire deposit as liquidated damages. There is no sliding scale, no good-faith exception for discovered defects, and no cooling-off period in most states.

The deposit may be refundable in limited circumstances, such as if the buyer’s financing falls through due to conditions outside the buyer’s control (subject to the specific financing contingency language in the contract) or if D.R. Horton exercises its right to cancel the agreement. The specific terms vary by state and contract version.

For a comprehensive analysis of deposit forfeiture across builders, see our guide: Can a Builder Keep My Deposit? Understanding Forfeiture Clauses.

Can You Negotiate a D.R. Horton Contract?

This is one of the most common questions buyers ask, and the honest answer is: mostly no, but there are exceptions.

What Is NOT Negotiable

The core legal clauses in D.R. Horton’s purchase agreement—mandatory arbitration, the habitability waiver, class action waiver, deposit forfeiture terms, liability limitation, and the material substitution clause—are generally not negotiable. These are standard corporate terms that local sales representatives do not have authority to modify. Asking the sales agent to change these provisions will typically result in a polite refusal and an assurance that the language is “standard.”

What MAY Be Negotiable

• Closing cost credits: D.R. Horton may offer $5,000–$15,000+ in closing cost credits, especially on standing inventory homes or at the end of fiscal quarters (March, June, September, December).
• Design center selections and upgrades: Flooring, countertops, fixtures, and other selections may be negotiable, particularly if you are buying early in a community’s development.
• Lot premiums: The premium charged for corner lots, cul-de-sac lots, or lots with views may have room for negotiation.
• Rate buydowns through DHI Mortgage: Temporary or permanent rate buydowns are a common incentive, though buyers should independently verify the value of these offers.
• Home price: On standing inventory homes that have been on the market for 60+ days, D.R. Horton may negotiate on price.

When You Have Leverage

Buyers have the most negotiating power in three situations: when purchasing standing inventory homes (completed homes that have not sold), at the end of D.R. Horton’s fiscal quarters when the company is working to meet volume targets, and in slower markets where the builder has excess supply. In hot markets with multiple offers on each home, leverage is minimal. Regardless of market conditions, get every promise in writing—verbal representations from sales agents are not binding under the contract’s integration clause.

State-by-State: How Your State’s Laws Affect D.R. Horton Contracts

D.R. Horton operates in 33 states, but the enforceability of its contract provisions varies significantly depending on where the home is located. The same clause that was struck down in South Carolina may be fully enforceable in Texas. Here is how key states affect D.R. Horton buyers:

For state-specific analysis covering all 15 states where D.R. Horton has a detailed profile, visit the D.R. Horton builder profile and select your state.

D.R. Horton Legal History: A Timeline

The following is a chronological summary of documented legal actions involving D.R. Horton. All entries are based on court filings, regulatory records, and published investigative reporting.

What Buyers Should Do Before Signing

None of this means you should not buy a D.R. Horton home. It means you should understand exactly what you are agreeing to before you sign. Here is what that looks like in practice.

Read every page of the purchase agreement. Do not skim. Do not rely on the sales agent’s summary of what the contract says. Sales agents are trained to move buyers through the process efficiently. They are not attorneys, and they do not represent your interests. If a clause seems confusing, that is precisely the clause you need to understand. Use our new construction checklist as a guide for what to look for.

Hire an independent home inspector. D.R. Horton conducts its own inspections at various stages of construction, but these inspections are performed by the builder or its agents. An independent, third-party inspector who works for you, not the builder, can identify defects before you close. Schedule inspections at the pre-drywall stage (when framing, plumbing, and electrical are still visible) and again before closing.

Do not let “standard language” dismiss your concerns. When a sales agent tells you that a clause is standard and every buyer signs it, that statement is technically accurate and completely irrelevant. The fact that every buyer signs a one-sided provision does not make it fair. It means every buyer is subject to the same risk. The question is whether you understand that risk and accept it knowingly.

Consult a real estate attorney in your state. An attorney who practices real estate law in your jurisdiction can tell you which contract provisions are enforceable, which have been struck down by courts in your state, and what your realistic options are if a dispute arises. The cost of a contract review is typically a few hundred dollars. The cost of discovering an unfavorable clause after closing can be tens of thousands.

Document everything in writing. If the sales agent makes verbal promises about upgrades, timelines, or warranty coverage, those promises are worthless unless they appear in the signed contract. Ask for written confirmation of any representation that influences your purchase decision. If the builder refuses to put it in writing, you have your answer about whether they intend to honor it.

Understand your financing options independently. D.R. Horton will likely encourage you to use DHI Mortgage, their affiliated lending subsidiary. The builder may offer incentives such as closing cost credits or rate buydowns that are contingent on using the in-house lender. Compare those offers against quotes from independent mortgage brokers. The Robinson v. D.R. Horton lawsuit in Nevada alleges that the in-house lending relationship was used to suppress monthly payment estimates. Whether or not those allegations are proven, getting an independent loan comparison is prudent financial practice.

Compare D.R. Horton with other builders. If you are considering a D.R. Horton home, compare their contract terms with those of competing builders in your market. Our D.R. Horton vs. Lennar comparison, D.R. Horton vs. KB Home, and D.R. Horton vs. PulteGroup pages provide side-by-side contract analysis.

A D.R. Horton purchase agreement is a binding legal document that governs a transaction worth hundreds of thousands of dollars. It deserves the same level of scrutiny you would apply to any contract of that magnitude. The clauses described in this guide are not hidden. They are printed in the agreement that every buyer receives. The issue is not access to the information. The issue is whether buyers understand what they are reading before they sign.

Frequently Asked Questions