How LGI Homes Uses This Clause
LGI Homes purchase agreements have been documented to include deposit forfeiture / earnest money trap provisions. Earnest money deposits may be classified as non-refundable liquidated damages if the buyer cancels for any reason. Multiple complaints document sales agents verbally telling buyers deposits are refundable, then refusing refunds by citing contract language. This clause has been the subject of litigation, including BBB and Consumer Complaints.
This provision typically appears within the purchase agreement alongside other terms that may limit buyer remedies.
LGI Homes's scale means contract templates are largely standardized across its operations. A clause identified in one market's contract is likely present in other markets' contracts, though local addenda may modify the terms.
Builder-Specific Details
Combined with Mandatory Arbitration
Deposit disputes must go through arbitration, where the cost may approach or exceed the deposit itself.
Standard Form Contract
This clause appears in LGI Homes's standard purchase agreement, which is generally presented on a take-it-or-leave-it basis. Buyers typically have limited ability to negotiate individual terms, though making the request in writing is still advisable.
Legal History
The following cases involve LGI Homes's use of this clause type.
BBB and Consumer Complaints
LGI Homes holds a 1.8 out of 5 star rating on PissedConsumer based on 292 reviews. Multiple complaints document a recurring pattern: salespeople tell buyers verbally that deposits are refundable, then refuse refunds by pointing to contract language that classifies the deposit as non-refundable liquidated damages.
State-by-State Enforceability
Enforceability of this clause varies by state. The following reflects LGI Homes's operating states.
| State | Status | Note |
|---|---|---|
| Texas | Likely Enforceable | Deposit forfeiture clauses in new construction contracts are generally enforceable in Texas when... |
| Florida | Likely Enforceable | Florida courts generally enforce deposit forfeiture provisions in new construction contracts when... |
| Georgia | Likely Enforceable | Georgia courts enforce liquidated damages provisions when the amount is a reasonable pre-estimate of... |
| North Carolina | Likely Enforceable | North Carolina courts enforce liquidated damages provisions, including deposit forfeiture in new... |
| South Carolina | Likely Enforceable | South Carolina courts enforce liquidated damages provisions in real estate contracts when the amount... |
| Arizona | Likely Enforceable | Arizona courts enforce deposit forfeiture clauses as liquidated damages when the amount is... |
| Nevada | Likely Enforceable | Nevada courts enforce liquidated damages provisions when the amount is reasonable relative to... |
| Colorado | Likely Enforceable | Colorado courts enforce liquidated damages clauses, including deposit forfeiture provisions, when... |
| Alabama | Likely Enforceable | Alabama courts enforce liquidated damages provisions when the amount is reasonable relative to the... |
| Tennessee | Likely Enforceable | Tennessee courts enforce liquidated damages provisions when the amount is reasonable in proportion... |
| Virginia | Likely Enforceable | Virginia courts enforce liquidated damages provisions in real estate contracts when the amount bears... |
| Ohio | Likely Enforceable | Ohio courts enforce liquidated damages provisions when the amount is reasonable and the damages were... |
| Pennsylvania | Likely Enforceable | Pennsylvania courts enforce liquidated damages provisions when the amount is a reasonable... |
| New Jersey | Likely Enforceable | New Jersey courts enforce liquidated damages provisions when the amount is reasonable in relation to... |
| Minnesota | Likely Enforceable | Minnesota courts enforce liquidated damages provisions when the amount is a reasonable forecast of... |
| Oregon | Likely Enforceable | Oregon courts enforce liquidated damages provisions when the amount is reasonable in relation to... |
| Washington | Likely Enforceable | Washington courts enforce liquidated damages provisions when the amount is reasonable relative to... |
| California | Likely Enforceable | California has one of the most detailed statutory frameworks governing liquidated damages in... |
| Maryland | Likely Enforceable | Maryland courts enforce liquidated damages clauses when the amount is a reasonable estimate of... |
Related Clauses in LGI Homes Contracts
This clause often works in combination with other provisions in LGI Homes's purchase agreements.
Deposit disputes must go through arbitration, where the cost may approach or exceed the deposit itself.
Buyers who discover hidden costs after signing may face deposit forfeiture if they attempt to cancel.
Incentives tied to using the preferred lender may be lost if the buyer switches lenders, and the deposit terms may reflect this.
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. LGI Homes's contract may allow deposit retention even in circumstances beyond your control.
- Review the BBB and Consumer Complaints case. The BBB and Consumer Complaints ruling may be relevant to your situation. If you are buying a LGI Homes home in a state with similar legal protections, this precedent could affect the enforceability of this clause.
- Have the full contract scanned before signing. This clause is often one of several interconnected provisions in LGI Homes contracts that collectively limit buyer remedies. A contract scan can identify all of them.