Legal Question in Real Estate Law in Pennsylvania

Construction of residential home, breach of contract

My husband and I are having a house constructed in the Poconos. Due to events out of our control,we cannot get a mortgage at this point and the house is almost completed. It states in the contract that the home would be completed within 120 days from the date it was started; as of today it has more than doubled that. We gave a down payment of $11,000.00 which we are now told will go towards interest on an end-loan for the construction of the house. Does the fact that this house should've been completed over 4 months ago, void this contract? Does it void our responsibility for the end-loan by at least half due to the fact that it has been accruing interest that also exceeds the 120 day clause?


Asked on 7/01/02, 4:48 pm

1 Answer from Attorneys
Miriam Jacobson Retired from practice of law

Re: Construction of residential home, breach of contract

The language of the contract would control what rights and obligations you have.

It is possible that you have a right to cancel the agreement because of the delay in completion, but often such contracts provide additional time to the builder/seller.

Also, the provisions about your liability if you default (are not able to perform your obligations) should set forth the extent of your liability. Usually attorneys representing buyers will attempt to limit their liability to the deposit money. For new construction, the seller may not agree to that.

Mortgage contingencies in purchases of existing housing usually permit the buyer to cancel the contract within a certain period of time. In the purchase of new construction, sellers may not agree to extend the normal time for application and approval of a mortgage, and that time may already have expired. Without knowing the exact language of your contract, it is impossible to advise you.

You should consult with a local attorney who regularly deals with purchase agreements for new home construction to assist you in determining your rights and obligations, and to advise you how to protect yourself from further obligations at this time.

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Answered on 7/01/02, 5:36 pm


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