How Meritage Homes Uses This Clause
Meritage Homes purchase agreements have been documented to include affiliated lender incentive steering provisions. Meritage offers financial incentives — such as closing cost credits or rate buydowns — conditioned on using MTH Mortgage. While the company's disclaimers state that use of affiliated providers is not required, the incentive structure can make outside financing significantly more expensive for the buyer.
This provision typically appears within the purchase agreement alongside other terms that may limit buyer remedies. This provision is closely connected to Meritage Homes's affiliated lending arm, MTH Mortgage, LLC (65% owned by Meritage).
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 Deposit Forfeiture
Incentives tied to using the preferred lender may be lost if the buyer switches lenders, and the deposit terms may reflect this.
Connection to MTH Mortgage, LLC (65% owned by Meritage)
Meritage Homes operates MTH Mortgage, LLC (65% owned by Meritage) as an affiliated lending arm. The builder may offer financial incentives for buyers who use this lender, which creates a direct connection between the lending relationship and the terms of the purchase agreement.
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 | Texas generally permits builders to offer incentives conditioned on using a preferred lender,... |
| Arizona | Likely Enforceable | Arizona permits builders to offer incentives conditioned on using a preferred lender, subject to... |
| California | Uncertain | California permits preferred lender arrangements subject to RESPA requirements, but the California... |
| Colorado | Likely Enforceable | Colorado permits builders to offer incentives conditioned on using a preferred lender, subject to... |
| Florida | Likely Enforceable | Florida permits builders to offer incentives conditioned on using a preferred lender, subject to... |
| Georgia | Likely Enforceable | Georgia permits builders to offer incentives conditioned on using a preferred lender, subject to... |
| North Carolina | Likely Enforceable | North Carolina permits builders to offer incentives conditioned on using a preferred lender, subject... |
| South Carolina | Likely Enforceable | South Carolina permits builders to offer incentives conditioned on using a preferred lender, subject... |
| Tennessee | Likely Enforceable | Tennessee permits builders to offer incentives conditioned on using a preferred lender, subject to... |
Related Clauses in Meritage Homes Contracts
This clause often works in combination with other provisions in Meritage Homes's purchase agreements.
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
- Compare rates with independent lenders. MTH Mortgage, LLC (65% owned by Meritage) may offer closing cost credits or other incentives, but the overall loan terms may not be the most competitive available.
- Calculate the true cost of lender incentives. A closing cost credit of several thousand dollars may be offset by a higher interest rate over the life of the loan. Run the numbers for your specific situation.
- 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.