How Meritage Homes Uses This Clause
Meritage Homes purchase agreements have been documented to include deposit forfeiture / earnest money trap provisions. The contract may characterize earnest money deposits as non-refundable upon buyer non-performance. Legal forum posts and attorney responses document cases where Meritage retained deposits of $3,500 to $10,000 when buyers failed to close, including situations where the buyer did not qualify for financing through the builder's affiliated lender.
This provision typically appears within the purchase agreement alongside other terms that may limit buyer remedies.
Meritage 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 Meritage 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.
State-by-State Enforceability
Enforceability of this clause varies by state. The following reflects Meritage Homes's operating states.
| State | Status | Note |
|---|---|---|
| Texas | Likely Enforceable | Deposit forfeiture clauses in new construction contracts are generally enforceable in Texas when... |
| Arizona | Likely Enforceable | Arizona courts enforce deposit forfeiture clauses as liquidated damages when the amount is... |
| California | Likely Enforceable | California has one of the most detailed statutory frameworks governing liquidated damages in... |
| Colorado | Likely Enforceable | Colorado courts enforce liquidated damages clauses, including deposit forfeiture provisions, 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... |
| Tennessee | Likely Enforceable | Tennessee courts enforce liquidated damages provisions when the amount is reasonable in proportion... |
Related Clauses in Meritage Homes Contracts
This clause often works in combination with other provisions in Meritage Homes's purchase agreements.
Deposit disputes must go through arbitration, where the cost may approach or exceed the deposit itself.
Incentives tied to using the preferred lender may be lost if the buyer switches lenders, and the deposit terms may reflect this.
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. Meritage Homes's 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 in Meritage Homes contracts that collectively limit buyer remedies. A contract scan can identify all of them.