How Chesapeake Homes Uses This Clause
Chesapeake Homes purchase agreements have been documented to include deposit forfeiture provisions. The contract may allow the builder to retain the buyer's earnest money deposit if the buyer cancels for reasons not explicitly covered by the agreement.
Forfeiture can occur even when the builder causes delays, changes specifications, or raises prices after signing. The deposit amount at risk depends on the specific contract terms and the home's purchase price.
Both Virginia and North Carolina courts generally enforce liquidated damages provisions when the amount is a reasonable estimate of anticipated damages, but provisions that function as penalties may be challenged.
Builder-Specific Details
Combined with Mandatory Arbitration
Deposit disputes must go through arbitration, where the cost of pursuing a claim may approach or exceed the deposit itself.
Regional Market Context
In the Hampton Roads and Outer Banks markets where Chesapeake Homes operates, deposit amounts and forfeiture terms may reflect local market conditions and competition levels.
State-by-State Enforceability
Enforceability of this clause varies by state. The following reflects Chesapeake Homes's operating states.
| State | Status | Note |
|---|---|---|
| Virginia | Likely Enforceable | Virginia courts enforce liquidated damages provisions in real estate contracts when the amount bears a reasonable relationship to anticipated damages. Provisions that function as penalties rather than reasonable estimates may be challenged. |
| North Carolina | Likely Enforceable | North Carolina courts enforce liquidated damages provisions, including deposit forfeiture in new construction contracts, when the amount is a reasonable estimate of anticipated damages. |
Related Clauses in Chesapeake Homes Contracts
This clause often works in combination with other provisions in Chesapeake Homes's purchase agreements.
Deposit disputes must go through arbitration, where the cost may approach or exceed the deposit itself.
Closing penalties can create pressure to close quickly, and failure to close may trigger deposit forfeiture.
What Buyers Can Do
- Understand exactly when your deposit becomes non-refundable. The contract may specify triggers that make the deposit non-refundable before you expect. Read the forfeiture conditions carefully.
- Know the cancellation provisions. Review what happens to your earnest money if you need to cancel. The contract may allow deposit retention even in circumstances beyond your control.
- Have the full contract scanned before signing. This clause is often one of several interconnected provisions that collectively limit buyer remedies. A contract scan can identify all of them.