Legal Question in Real Estate Law in Massachusetts
Builder stopped construction on new house
A 10% deposit ($65K) was put down for a new home to builder The builder finished about 60% of house, but seems to have run out of money. The deposit was made about 20 months ago.
The builder plans to let bank foreclose on house, which
may cost $300K to complete, but would be worth about
$900K+ when finished. Builder will NOT file for bankruptcy.
Can someone who has a P&S agreement with a deposit on house
get house from bank (who foreclosed on builder) for agreed-upon price? Or do you just lose $65K deposit and need to go after builder to get $65K back. What rights does buyer have to house if back forecloses?
1 Answer from Attorneys
Re: Builder stopped construction on new house
Based on these facts, your recourse would be against the builder if the builder failed to deliver the house on the closing date. In the typical P & S agreement, if the seller (in this case a builder), fails to transfer the house on closing date, then the buyer is entitled to a return of the deposit. In this situtations, builders may get a construction loan to finance the building of the property and when the property is sold, the loan is paid. You could certianly try to buy the house at a foreclosure sale, however, based on these facts, you would not have any right to force the bank to sell for the agreed upon price since you have no contract with the bank. I am not sure why you would want to get the house for the agreed upon price if it is not complete. I would strongly advise that you hire an attorney to protect your interests.
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