Contracts & Agreements

What Happens If I Don't Close on Time with a Builder?

Q: What happens if I don't close on time with a builder?

You may face daily penalty fees (typically $100-$200 per day), forfeiture of your earnest money deposit, or contract termination. Builder contracts often impose strict closing deadlines. Get pre-approved for financing and understand your contract's deadline and penalty provisions before signing.

Quick Answer

You may face daily penalty fees, deposit forfeiture, or contract termination. Builder contracts often impose strict closing deadlines with severe consequences for delays.

The Short Answer

Most new construction contracts set a specific closing date (or a date range), and many impose financial penalties if the buyer fails to close by that date. Penalties can include daily fees, deposit forfeiture, or both.

The builder's closing timeline is often driven by their own financial reporting and inventory management, not your convenience.

Daily Closing Penalties

Some builder contracts include a daily penalty clause — for example, $100 to $200 per day for each day past the scheduled closing date. These fees can add up quickly and are typically non-negotiable once triggered.

The rationale is that the builder incurs carrying costs (property taxes, insurance, HOA fees, loan interest) for each day the home sits unsold after completion.

Deposit Forfeiture

If you fail to close within the contract's timeframe, many builders can declare you in default and keep your entire earnest money deposit as liquidated damages.

Some contracts give the builder a short grace period before triggering forfeiture. Others do not. Read your contract carefully to understand the exact timeline.

Common Reasons for Closing Delays

Financing issues are the most common cause — your loan does not get approved, the appraisal comes in low, or underwriting takes longer than expected.

Title issues, insurance delays, and last-minute inspection findings can also push closing dates back.

If the delay is the builder's fault (construction not finished, certificate of occupancy not obtained), you should not be penalized — but verify this in your contract.

How to Protect Yourself

Get pre-approved (not just pre-qualified) before signing a purchase agreement.

Understand your contract's closing deadline and any grace periods.

Ask what specific penalties apply if closing is delayed and who determines the cause of the delay.

Lock your mortgage rate early enough that it does not expire before closing.

Stay in close communication with your lender throughout the process.