Legal Question in Real Estate Law in Maryland

I am in MD and signed a contract for new construction on a single family home. The builder tells me that since i was unable to get financed through his preferred lenders he will make an exception and let me use another lender i find on my own. I found the lender, got pre-approved and was told by the builder everything is good to go and he will get the permits to start breaking ground. A few weeks later I called to find out when we will be ready for our pre-construction meeting and he states he has not even ordered the permits yet so I asked why not. What he explains to me and my lender is that the permits cost a lot of money and he wants to make sure I can "really" get financed. I asked what does he mean "really" and he says because his guys could not finance me he wants to be sure THEREFORE I must go through with underwriting. My lender who has done deals with this company in the past says that is crazy because underwriting will expire long before the house is ever built and then we will have to do underwriting again once the house is closer to being done. My lender said he did not have to do this with his other clients and feels its a form of discrimination. Is this legal ?


Asked on 1/23/13, 6:14 pm

1 Answer from Attorneys
Robert Sher Wagshal and Sher

I think it is understandable that the builder wants to see you get a loan commitment before he advances any costs, especially since his preferred lender rejected you. Pre-approval is always conditional and no guarantee that there will be final approval, as there must be a credit check and appraisal of the project. I don't see this as anything more than a businessman protecting his financial interests, nothing illegal involved. If theoretically you could discover that he treated other customers in similar situations differently and that was based on race, ethnicity etc., it might be a civil rights violation, but it's highly unlikely you could ever demonstrate this.

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Answered on 1/24/13, 8:23 am


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