How Toll Brothers Uses This Clause
Toll Brothers purchase agreements have been documented to include affiliated lender incentive steering provisions. Toll Brothers may offer closing cost credits or rate buy-downs of $10,000 to $20,000 that are only available if the buyer finances through Toll Brothers Mortgage Company. CFPB complaints indicate the company has required buyers to obtain pre-qualification through its in-house lender. Buyers should compare whether incentives offset potentially higher rates over the full loan term. This clause has been the subject of litigation, including Noohi v. Toll Bros., Inc..
This provision typically appears within the purchase agreement alongside other terms that may limit buyer remedies. This provision is closely connected to Toll Brothers's affiliated lending arm, Toll Brothers Mortgage Company (formerly TBI Mortgage). Because Toll Brothers operates across multiple states, the enforceability and practical impact of this clause varies depending on where the home is located.
As a builder operating in the upper price segments, Toll Brothers buyers may have somewhat more leverage to negotiate contract terms compared to entry-level buyers. However, the presence of this clause in standard purchase agreements means buyers should review it carefully regardless of price point.
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.
Standardized Across Markets
Toll Brothers's scale means contract templates are largely standardized across its operations. This clause identified in one state's contract is likely present in other states' contracts, though local addenda may modify the terms.
Connection to Toll Brothers Mortgage Company (formerly TBI Mortgage)
Toll Brothers operates Toll Brothers Mortgage Company (formerly TBI Mortgage) 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.
Legal History
The following cases involve Toll Brothers's use of this clause type.
Noohi v. Toll Bros., Inc.
In a putative class action, prospective buyers alleged Toll Brothers refused to return deposits when buyers could not obtain mortgage financing. The Fourth Circuit affirmed the district court's holding that Toll Brothers' arbitration provision was unenforceable because it required the buyer — but not the seller — to submit disputes to arbitration, lacking mutuality of consideration under Maryland law. Toll Brothers petitioned the U.S. Supreme Court for review; the petition was denied.
State-by-State Enforceability
Enforceability of this clause varies by state. The following reflects Toll Brothers's operating states.
| State | Status | Note |
|---|---|---|
| California | Uncertain | California permits preferred lender arrangements subject to RESPA requirements, but the California... |
| Texas | Likely Enforceable | Texas generally permits builders to offer incentives conditioned on using a preferred lender,... |
| Florida | Likely Enforceable | Florida permits builders to offer incentives conditioned on using a preferred lender, subject to... |
| Arizona | Likely Enforceable | Arizona permits builders to offer incentives conditioned on using a preferred lender, subject to... |
| Colorado | Likely Enforceable | Colorado permits builders to offer incentives conditioned on using a preferred lender, subject to... |
| Nevada | Likely Enforceable | Nevada permits builders to offer incentives conditioned on using a preferred lender, subject to... |
| Virginia | Likely Enforceable | Virginia permits builders to offer incentives conditioned on using a preferred lender, subject to... |
| Maryland | Uncertain | Maryland permits preferred lender arrangements subject to RESPA requirements, but Maryland's... |
| Pennsylvania | Uncertain | Pennsylvania permits preferred lender arrangements subject to RESPA requirements, but the... |
| New Jersey | Uncertain | New Jersey permits preferred lender arrangements subject to RESPA requirements, but the New Jersey... |
| New York | Uncertain | New York permits preferred lender arrangements subject to RESPA requirements, but the New York... |
| Connecticut | Uncertain | Connecticut permits preferred lender arrangements subject to RESPA requirements, but Connecticut's... |
| 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... |
| 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... |
| Idaho | Likely Enforceable | Idaho permits builders to offer incentives conditioned on using a preferred lender, subject to... |
| Washington | Uncertain | Washington permits preferred lender arrangements subject to RESPA requirements, but the Washington... |
| Utah | Likely Enforceable | Utah permits builders to offer incentives conditioned on using a preferred lender, subject to... |
| Michigan | Likely Enforceable | Michigan permits builders to offer incentives conditioned on using a preferred lender, subject to... |
| Illinois | Uncertain | Illinois permits preferred lender arrangements subject to RESPA requirements, but the Illinois... |
| Delaware | Likely Enforceable | Delaware permits builders to offer incentives conditioned on using a preferred lender, subject to... |
Related Clauses in Toll Brothers Contracts
This clause often works in combination with other provisions in Toll Brothers'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. Toll Brothers Mortgage Company (formerly TBI Mortgage) 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.
- Review the Noohi case. The Noohi v. Toll Bros., Inc. ruling may be relevant to your situation. If you are buying a Toll Brothers 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 Toll Brothers contracts that collectively limit buyer remedies. A contract scan can identify all of them.