New Construction Checklist: Before You Sign

Search your county court records and federal case databases for lawsuits involving the builder. Focus on construction defect claims, breach of warranty suits, and consumer protection complaints.

Why it matters: Builders with patterns of construction defect lawsuits may have systemic quality control problems. A history of litigation does not guarantee you will have issues, but it signals risk that deserves further investigation before you commit financially.

Visit the Consumer Financial Protection Bureau complaint database and search for complaints against the builder and their affiliated mortgage company. Pay attention to complaints about closing pressure, loan estimate changes, and incentive bait-and-switch tactics.

Why it matters: The CFPB database captures real buyer experiences with the builder's lending arm. Patterns of complaints about last-minute loan term changes or pressure to use the preferred lender can indicate practices you should prepare for.

Most national builders publish their warranty guidelines online or through third-party warranty providers. Read these before you visit so you understand what is and is not covered before a sales agent frames the warranty for you.

Why it matters: Sales agents often describe the warranty in broad, reassuring terms. Reading the actual warranty document in advance lets you ask specific questions about exclusions, claim deadlines, and voiding conditions.

Secure a mortgage pre-approval from an independent lender before visiting the model home. This gives you a baseline to compare against the builder's preferred lender terms and protects you from relying solely on the builder's financing estimates.

Why it matters: Builders often tie substantial incentives to using their affiliated lender. Without an independent pre-approval for comparison, you cannot evaluate whether the preferred lender's terms are genuinely competitive or whether the incentives offset higher rates and fees.

Check recent sale prices for existing homes in the same neighborhood or nearby communities. Compare price per square foot, lot size, and included features to understand the new construction premium you are paying.

Why it matters: New construction pricing often includes a premium over comparable resale homes. Understanding the gap helps you evaluate whether builder upgrades and warranties justify the additional cost and affects your long-term equity position.

Do not skip addenda, exhibits, warranty booklets, or any document the builder asks you to sign. The most consequential clauses are often buried in sections that buyers are told are "standard" or "just boilerplate."

Why it matters: Builder contracts can exceed 50 pages across multiple documents. Clauses that limit your legal rights, cap the builder's liability, or give the builder unilateral modification rights are routinely placed in addenda and exhibits that many buyers never read.

Engage an attorney who has specific experience with new construction purchase agreements in your state. A general real estate attorney may miss builder-specific clauses. Ask the attorney to explain every clause that limits your rights or expands the builder's discretion. Learn more about common contract issues in our D.R. Horton purchase agreement guide and Lennar contract red flags.

Why it matters: Attorney review typically costs $300 to $800 and can identify tens of thousands of dollars in risk exposure. Many buyers skip this step because the builder says the contract is non-negotiable, but an attorney can still explain what you are agreeing to and advise whether to proceed.

This warranty is your legal right to a home that is safe and fit to live in. Some builders ask you to waive it entirely. In some states, this waiver has been found unconscionable by courts. Read more about habitability waiver clauses.

Why it matters: The implied warranty of habitability is one of the strongest consumer protections available to homebuyers. Waiving it means the builder has no legal obligation to deliver a home fit for occupancy, leaving you with only the limited express warranty as recourse.

Arbitration clauses eliminate your right to sue in court or have a jury hear your case. Disputes go to a private arbitrator, often through a process the builder is more familiar with than you are. See our mandatory arbitration clause guide and arbitration glossary entry.

Why it matters: Arbitration outcomes statistically favor repeat participants, and builders are repeat participants. You also typically lose the right to appeal and the right to discovery, which limits your ability to obtain the builder's internal documents about known defects.

This clause prevents you from joining with neighbors who may have the same issues. It forces each buyer to fight the builder alone, which can make legal action cost-prohibitive for individual claims.

Why it matters: Construction defects often affect entire communities. A class action waiver means that even if every home in a development has the same foundation issue, each homeowner must bring a separate claim. For defects that cost $5,000 to $15,000 to repair, the cost of individual arbitration often exceeds the recovery.

Know exactly what triggers forfeiture and how much you could lose. Some contracts allow the builder to keep 10 to 15 percent of the purchase price if you back out for any reason, including defects found during inspection. Review our deposit forfeiture clause analysis and blog post on deposit forfeiture. See also: earnest money.

Why it matters: On a $400,000 home, a 10 percent forfeiture clause puts $40,000 at risk. This creates enormous pressure to close even if serious problems are discovered, because walking away means losing your deposit on top of months of waiting.

Many builder contracts impose fines of $100 to $250 or more per day if you delay closing. This creates financial pressure to close even if problems are discovered during the final walkthrough. See how different builders handle closing penalties.

Why it matters: Daily penalties can accumulate to thousands of dollars if your lender needs extra time, if permits are delayed, or if you discover defects at the walkthrough. The clause is designed to ensure the builder's closing timeline takes priority over your readiness.

This clause determines whether the builder can swap the materials, fixtures, and finishes you were shown for cheaper alternatives. Look for language like "equivalent quality" or "at builder's discretion."

Why it matters: Material substitutions can meaningfully affect your home's value and durability. Granite countertops swapped for a lower-grade quartz, or engineered hardwood replaced with luxury vinyl, may look similar initially but differ in longevity, resale value, and feel.

Some contracts give the builder the right to change floor plans, lot grading, landscaping, community amenities, or home specifications without your consent and without giving you a right to cancel.

Why it matters: This clause means the home or community you move into may differ from what you agreed to purchase. Promises about parks, pools, walking trails, or specific lot features may not be binding if the contract reserves the builder's right to modify.

The builder typically controls the HOA until a majority of lots are sold, sometimes for years. Understand when control transfers to homeowners and what financial obligations the builder has at that point. See our declarant rights glossary entry.

Why it matters: Builders controlling the HOA can set artificially low dues during sales to make the community more attractive, then hand over an underfunded association with deferred maintenance. HOA dues may increase substantially once homeowner control begins.

Know exactly what you lose by choosing your own lender instead of the builder's affiliated mortgage company. The difference can be $5,000 to $20,000 or more in lost incentives, closing cost credits, or upgrades.

Why it matters: Preferred lender incentives are structured to make comparison shopping feel financially punishing. In some cases, the builder's lender offers a competitive rate and the incentives are genuine savings. In other cases, higher closing costs, origination fees, or unfavorable loan terms offset the incentive value.

Verify whether the estimated monthly payment includes property taxes, homeowner's insurance, HOA dues, and any special assessments. Payment estimates that exclude these costs can be significantly lower than your actual obligation.

Why it matters: An advertised payment of $2,200 per month that excludes $450 in property taxes and $150 in HOA dues is actually $2,800 per month. Buyers who budget based on the advertised number can face serious financial strain after closing.

Hire an independent inspector to examine the framing, electrical, plumbing, and HVAC installation before drywall covers everything. This inspection typically costs $300 to $500 and should happen after rough-in inspections pass but before insulation and drywall are installed. See our pre-drywall inspection glossary entry.

Why it matters: Once drywall is up, framing defects, missing fire blocking, improperly supported plumbing, and electrical issues become invisible. A pre-drywall inspection is your one opportunity to catch structural and systems problems that would otherwise remain hidden until they cause damage.

Visit the job site regularly and photograph framing, plumbing rough-in, electrical rough-in, HVAC ductwork, insulation, and exterior waterproofing. Take wide shots and close-ups with timestamps. Check your contract for any site visit restrictions.

Why it matters: Photo documentation creates a record of what is behind your walls. If a leak, crack, or system failure occurs years later, photos can help an inspector determine root cause and can serve as evidence if you need to file a warranty claim or legal action.

Compare installed materials, fixtures, and finishes against your contract specifications and selection sheet. Check cabinet brands, countertop materials, flooring type, appliance models, lighting fixtures, and paint colors.

Why it matters: Material substitutions happen more often than buyers expect. Catching a substitution during construction gives you leverage to require correction. After closing, the builder may argue you accepted the substitution by not raising it during the walkthrough.

Some contracts restrict when you can inspect, what areas your inspector can access, or state that the builder has no obligation to address your inspector's findings. Know your rights before you schedule an inspection.

Why it matters: If your contract limits inspection access, you may only get one chance to inspect at a specific construction stage. Understanding these restrictions in advance lets you plan inspections strategically and hire an inspector who knows what to prioritize within the allowed scope.

Observe how the builder grades your lot and adjacent lots. Water should drain away from your foundation in all directions. Pay attention to the relationship between your lot elevation and neighboring properties.

Why it matters: Drainage problems are among the most common and most expensive post-closing issues. Many builder warranties explicitly exclude grading, drainage, and water intrusion. Identifying concerns during construction, when they can still be corrected, is far less costly than remediation after closing.

Inspect every room, every surface, every fixture, and every system. Test all outlets, faucets, appliances, HVAC, garage doors, locks, and windows. Bring a phone charger to test outlets and run water long enough to check for leaks. Budget at least two to three hours.

Why it matters: The walkthrough is your last opportunity to identify defects before closing. Items not documented during the walkthrough may be harder to get the builder to address afterward, especially if your contract limits post-closing repair obligations to punch list items.

Document every defect, scratch, dent, misalignment, paint imperfection, and incomplete item. Photograph each issue and note its exact location. Do not rely on verbal promises. The punch list should be a written, signed document.

Why it matters: A written punch list with photos creates an enforceable record. Verbal commitments from a site superintendent or sales agent are difficult to prove and easy for the builder to deny after closing.

Understand whether the builder's repair obligations are limited to items identified during a single walkthrough. If something is not on the punch list, the builder may argue they have no obligation to fix it.

Why it matters: Some contracts define the punch list walkthrough as the exclusive process for identifying pre-closing defects. If you miss an item, the builder may treat it as a post-closing warranty issue with different timelines and response obligations.

Request copies of all building permits and confirm that final inspections have been completed and approved by your local building authority. Check for the certificate of occupancy or equivalent in your jurisdiction.

Why it matters: Open permits mean the local authority has not confirmed the home meets building codes. Closing on a home with open permits can create legal and insurance complications, and the responsibility for resolving open permits may fall to you as the new owner.

A certificate of occupancy is the government's confirmation that the home meets minimum building codes. Some contracts state that the builder's failure to obtain one is not grounds to delay closing.

Why it matters: Moving into a home without a certificate of occupancy can violate local ordinances. Your homeowner's insurance may not cover a home that lacks code compliance documentation, and your lender may have requirements around this as well.

Review your Closing Disclosure line by line against the Loan Estimate you received when you applied. Federal law (TILA-RESPA) limits how much certain fees can increase. Flag any changes to interest rate, loan amount, closing costs, or prepaid items.

Why it matters: Last-minute changes to loan terms are more common with builder-affiliated lenders. An interest rate increase of just 0.25 percent on a $350,000 mortgage adds roughly $17,000 in interest over 30 years. You have the right to walk away if terms changed materially, though your deposit may be at risk depending on your contract.

The builder's limited warranty likely excludes certain defects, commonly drainage, grading, mold, and soil settlement. Know what is not covered before you close. Compare the builder's warranty to coverage available through other builders like D.R. Horton and Lennar.

Why it matters: Warranty exclusions define the gap between what you expect the builder to stand behind and what the builder is legally obligated to repair. Understanding exclusions before closing lets you make an informed decision and budget for risks the warranty does not cover.

Some warranties can be voided if you fail to follow the builder's maintenance schedule, make your own repairs, or miss tight claim deadlines. Understand what actions could cause you to lose coverage.

Why it matters: A warranty that can be voided by common homeowner actions like hiring your own plumber or missing a 30-day claim window provides less protection than it appears. Knowing the voiding triggers lets you comply with requirements and preserve your coverage.

Read every document before signing, including the deed, closing disclosure, warranty enrollment, HOA documents, and any post-closing agreements. Do not let the closing agent or builder representative rush you through the stack.

Why it matters: Closing appointments are often scheduled with tight time windows to create urgency. Documents signed at closing are legally binding. Taking the time to read each document is your right, and discovering an unexpected clause before you sign is far better than discovering it after.

If you discover a new document, an unexpected clause, or terms that differ from what you were told, you have the right to pause the closing. Daily penalties and closing deadlines create pressure, but signing documents you do not understand creates long-term risk.

Why it matters: The time pressure at closing is a well-documented dynamic. Buyers who have waited months for their home to be built are psychologically committed and reluctant to delay. Closing-day logistics — coordinated signings, pre-scheduled fund transfers, imminent move-in — reinforce the momentum to sign rather than pause.

If any punch list items are incomplete, get written confirmation at closing that specifies each remaining item, the expected completion date, and the builder's obligation to complete them. Do not accept verbal assurances.

Why it matters: Once you close and fund, your leverage decreases significantly. A written punch list agreement signed at closing creates a contractual obligation that survives the transaction. Without it, the builder may deprioritize your repairs in favor of new builds and upcoming closings.

Builders may only need to "substantially" complete the home before requiring you to close. This can mean moving into a home with unfinished work and relying on post-closing promises to complete it.

Why it matters: Substantial completion is a lower standard than full completion. It means the builder considers the home livable even if landscaping, touch-up paint, appliance installation, or other items remain unfinished. Your obligation to close may be triggered before the home is truly finished.

This clause makes the builder's limited warranty your only legal option. It may prevent you from pursuing claims for breach of contract, negligence, or violations of state consumer protection laws.

Why it matters: Without access to broader legal claims, your remedies are limited to whatever the builder's warranty covers, and warranty coverage is defined entirely by the builder. State consumer protection statutes often provide stronger remedies including attorney's fees, but a sole remedy clause may attempt to eliminate those options.

Some contracts reduce the time you have to take legal action from the state's standard, often 3 to 10 years, to as little as one year. Many construction defects do not appear until years after closing.

Why it matters: Foundation cracks, roof failures, plumbing leaks behind walls, and moisture intrusion often take two to five years to manifest. A shortened statute of limitations may expire before you discover the defect, eliminating your legal recourse entirely.

This clause may prevent you from recovering the full cost of repairs, temporary housing, or other damages, even if the builder is proven to be at fault.

Why it matters: If a major defect requires $80,000 in foundation repair and $15,000 in temporary housing, a liability cap may limit your recovery to a fraction of that amount. The builder's total financial exposure is capped regardless of the actual damage caused.

Most builder warranties provide one year of coverage for workmanship and materials. Hire an independent inspector at the 11-month mark to identify every defect before your warranty expires. Submit all findings in writing to the builder before the one-year deadline. Learn more in our warranty glossary entry.

Why it matters: Defects that are invisible at closing often appear within the first year as the home settles, seasons change, and systems are used daily. An 11-month inspection is your last chance to use the builder's one-year warranty for items like drywall cracks, grout issues, trim separation, and minor plumbing leaks.

Submit every warranty claim via email or certified mail so you have a dated record. Include photos, a clear description of the defect, and a reference to the applicable warranty section. Keep copies of all correspondence.

Why it matters: Written documentation creates a paper trail that protects your legal rights. If the builder fails to honor a warranty claim, written records of your timely notification are essential evidence. Phone calls and verbal complaints are difficult to prove and easy for the builder to deny.

Research the deadlines in your state for filing construction defect claims. The statute of limitations governs how long you have after discovering a defect, while the statute of repose sets an absolute outer boundary from the date of completion. Visit our FAQ for state-specific guidance.

Why it matters: These deadlines vary significantly by state and by the type of claim. Missing a filing deadline permanently eliminates your legal options regardless of the severity of the defect. Understanding your state's timelines lets you make informed decisions about when to take action.

Store your purchase agreement, warranty documents, inspection reports, correspondence with the builder, and all claim records in a safe, organized location. Digital backups are recommended.

Why it matters: Structural defect claims can arise 5 to 10 years after closing. If you need to file a claim or take legal action years from now, having complete documentation of your contract terms, the builder's representations, and your warranty claim history is essential to proving your case.