This report was generated from a publicly available D.R. Horton purchase agreement for a new construction home in Maryland.
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This contract is heavily weighted in favor of the builder, with multiple critical provisions that limit the buyer's legal remedies and shift financial risk to the purchaser. Liability disclaimers, habitability waivers, deposit forfeiture terms, and per-day closing penalties work in combination to narrow buyer recourse and create financial cost on any closing delay.
“SELLER SHALL HAVE NO LIABILITY OR OBLIGATION TO PURCHASER OF ANY NATURE WHATSOEVER”
This clause limits or eliminates the builder's monetary liability for damages arising from construction defects or other contract breaches. Without this clause, a buyer who proved a builder breach would be entitled under state contract law to recover direct damages (the cost to repair the defect) and, depending on the jurisdiction, consequential damages (temporary housing during repairs, lost rental income, diminished property value, and medical expenses tied to construction-related conditions like mold). With this clause, those categories of recovery are typically waived; in some contracts, the builder's total liability is also capped at the purchase price or a small fixed amount. The South Carolina Supreme Court found this category of language — specifically, contract provisions stating the builder "shall not be liable for monetary damages of any kind" — unconscionable in Smith v. D.R. Horton, Inc. (S.C. 2016), but enforcement varies significantly by state.
Review with a licensed real estate attorney before proposing to the builder.
“Builder shall be liable for all direct and consequential damages arising from construction defects, including but not limited to: cost of repair, cost of temporary housing during repairs, lost rental income, diminution in property value, and medical expenses related to construction defect exposure. Builder shall not limit liability for damages arising from gross negligence, willful misconduct, or fraud.”
“SELLER HEREBY DISCLAIMS ANY AND ALL SUCH OTHER WARRANTIES, EXPRESS OR IMPLIED”
This clause means the builder is not guaranteeing that your home will be safe to live in. By signing this, you agree that even if the home has serious problems — mold growing in the walls, sewage backing up, structural failures that make rooms dangerous to enter — the builder has no obligation to make it livable. Without this waiver, state law would impose an implied warranty of habitability that requires the home to be fit for residential use at delivery. With the waiver, you could end up paying a mortgage on a home you cannot legally compel the builder to make livable.
Review with a licensed real estate attorney before proposing to the builder.
“Buyer does not waive any implied warranty of habitability, merchantability, or fitness for a particular purpose provided under applicable state law. Builder warrants that the home, at time of closing, shall be free from defects that render the home unsuitable for residential habitation, and this warranty shall survive closing for a period of no less than two (2) years.”
“Seller shall retain all Earnest Money and Option Money as liquidated damages”
This clause means if you back out of the deal for any reason — even if your inspector found foundation cracks, mold in the walls, or the home fails to meet building codes — the builder can keep your entire deposit as liquidated damages. On a $400,000 home, that could be up to $60,000 gone. By overriding the inspection contingencies that typically protect buyer deposits, this provision makes the financial cost of walking away from a defective home roughly equivalent to the cost of closing on one.
Review with a licensed real estate attorney before proposing to the builder.
“In the event Buyer elects not to proceed with closing due to material construction defects identified during inspection — including but not limited to structural deficiencies, mold, water intrusion, grading or drainage issues, or code violations — Buyer shall receive a full refund of all deposits within fifteen (15) business days. Liquidated damages, if any, shall be limited to the lesser of 1% of the purchase price or actual documented damages incurred by Builder.”
“The remedies specified below shall be the sole and exclusive remedies available to the parties”
This clause states that the builder's limited warranty is your only option if something goes wrong. You cannot pursue any other legal claim — not breach of contract, not negligence, not fraud, not any consumer protection claim your state provides. Your only recourse is whatever the builder's own warranty says, which as noted in other clauses, typically excludes the most common and expensive problems. This clause is what transforms the limited warranty from a supplemental protection into your sole legal recourse — without it, you would retain the full set of remedies provided under state law.
Review with a licensed real estate attorney before proposing to the builder.
“Builder's limited warranty shall not constitute the sole or exclusive remedy available to Buyer. Buyer retains all rights and remedies available under applicable state law, including but not limited to claims for breach of contract, negligence, breach of implied warranties, fraud, and violations of state consumer protection statutes.”
“Purchaser shall pay to Seller an Extension Fee in the amount of one percent (1.00 %) of the final Purchase Price”
This clause means the builder can charge you a fine — often $100 to $250 per day or more — if you delay closing for any reason. Found a problem during your final walkthrough? That'll cost you per day while you try to get it fixed. Need a few extra days for your inspector? More fees. Some contracts go further, providing that the builder may terminate the deal entirely and keep your deposit if the delay exceeds a short window. The practical effect is that the cost of holding out for repairs quickly exceeds the cost of closing on an unfinished or defective home.
Review with a licensed real estate attorney before proposing to the builder.
“Builder shall not impose any per diem charges or daily penalties for delays in closing caused by unresolved construction defects, incomplete punch list items, failure to obtain a certificate of occupancy, or any condition that renders the home not substantially complete. Buyer shall have the right to delay closing for up to thirty (30) days without penalty if any material defect is identified during the pre-closing walkthrough.”
Plus 8 more clauses analyzed in your full report, including mandatory arbitration, punch list limitations, warranty exclusions, and material substitution provisions.
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