New construction purchase agreements contain dozens of clauses that can limit your rights as a buyer. Below are the most common clause types we encounter, organized by risk level. Select any clause to read a detailed explanation of what it means, which builders use it, and how it may be enforced in your state.
Implied Warranty of Habitability Waiver
A clause in a new construction purchase agreement that asks the buyer to give up (waive) the implied warranty of habitability. This warranty is a lega...
Mandatory Binding Arbitration
A clause that requires any dispute between the buyer and the builder to be resolved through private arbitration instead of a court of law. This means...
Class Action Lawsuit Waiver
A clause that prevents the buyer from joining or participating in a class action lawsuit against the builder. This means that even if every home in a...
Deposit Forfeiture / Earnest Money Trap
A clause that allows the builder to keep the buyer's entire deposit (earnest money) if the buyer fails to close for any reason, including reasons rela...
Limitation of Liability / No Monetary Damages
A clause that limits or eliminates the builder's financial liability for damages caused by construction defects. This may cap the builder's total liab...
Monthly Payment Suppression / Hidden Costs
A practice where the builder or its affiliated mortgage company presents artificially low monthly payment estimates that exclude or minimize property...
Daily Closing Penalty / Pressure Clause
A clause that imposes financial penalties — typically $100 to $250 or more per day — if the buyer delays closing for any reason. Some contracts also a...
Certificate of Occupancy Irrelevance
A clause stating that the builder's failure to obtain a Certificate of Occupancy (CO) — the government document certifying a home meets minimum buildi...
Punch List Limitation
A clause that limits the builder's repair obligations to only those items specifically identified on the pre-closing punch list (walkthrough checklist...
Independent Inspection Restriction
A clause that limits or eliminates the buyer's right to have an independent, licensed home inspector examine the property during construction or befor...
Material Substitution at Builder's Discretion
A clause that gives the builder the right to substitute materials, fixtures, appliances, and finishes specified in the contract or displayed in the mo...
Restrictive Limited Warranty Exclusions
A clause where the builder's limited warranty explicitly excludes coverage for common and often expensive construction defects, including drainage pro...
Warranty Voiding / Access Requirements
A clause that allows the builder to void (cancel) the home's warranty if the buyer fails to follow specific maintenance requirements, provide immediat...
Builder's Preferred Lender Lock-In
A contractual arrangement where the builder offers financial incentives — such as closing cost credits, interest rate buydowns, or free upgrades — tha...
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