How Smith Douglas Homes Uses This Clause
Smith Douglas Homes purchase agreements have been documented to include affiliated lender incentive steering provisions. Smith Douglas conditions closing cost assistance of up to $10,000\u2013$15,000 on the buyer financing through its affiliated lender, Ridgeland Mortgage (a joint venture with loanDepot). Buyers who choose an outside lender forfeit these incentives, creating financial pressure to use the builder's lending partner regardless of whether competing rates or terms are more favorable. (Source: smithdouglas.com; loanDepot press release, 2024)
This provision typically appears within the purchase agreement alongside other terms that may limit buyer remedies. This provision is closely connected to Smith Douglas Homes's affiliated lending arm, Ridgeland Mortgage (joint venture with loanDepot).
Smith Douglas 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 Ridgeland Mortgage (joint venture with loanDepot)
Smith Douglas Homes operates Ridgeland Mortgage (joint venture with loanDepot) 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 Smith Douglas 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 Smith Douglas Homes's operating states.
| State | Status | Note |
|---|---|---|
| Georgia | Likely Enforceable | Georgia permits builders to offer incentives conditioned on using a preferred lender, subject to... |
| Tennessee | Likely Enforceable | Tennessee permits builders to offer incentives conditioned on using a preferred lender, subject to... |
| Alabama | Likely Enforceable | Alabama 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... |
| Texas | Likely Enforceable | Texas generally permits builders to offer incentives conditioned on using a preferred lender,... |
Related Clauses in Smith Douglas Homes Contracts
This clause often works in combination with other provisions in Smith Douglas 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. Ridgeland Mortgage (joint venture with loanDepot) 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 Smith Douglas Homes contracts that collectively limit buyer remedies. A contract scan can identify all of them.