Purchasing a new home from a builder.

Originally we were going to pay cash with the proceeds from the sale of current home.

Signed the contract for a cash purchase.

Things changed and we decided to get a mortgage to bridge the gap and purchase the home right away, but the lender is slow and we cannot get closed by the original date on the contract.

Per the contract, we agreed to "$100/day plus interest in accordance with and at the maximum rate permitted by the Texas Property Code, or other applicable statutes, from the scheduled closing date until closing at the maximum interest rate allowed by law"

My question - what is the maximum rate permitted by the Texas Property Code ?

What is "maximum interest rate allowed by law"

And isn't that redundant in that sentence?

Here you go...

What is your close date? I might be able to get it done

SteveBott said:

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What is your close date? I might be able to get it done

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Friday.

Not expecting to get it done, I just think what the builder proposed to me in writing is excessive. I cannot calculate it because I do not know the rate.

Was trying to extend for 20 days.

Just FYI I'd tell them to eat a dick. Especially if you used their lender. Your escrow money is a factor so be careful how far you walk the plank. But walk some of the way to see your real options.

Oh and bark at lender to cover costs or some of them.

IF you can prove incompetence. I'm a lender and I can say you will rarely prove that. But I do make mistakes as we all do.

SteveBott said:

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Just FYI I'd tell them to eat a dick. Especially if you used their lender. Your escrow money is a factor so be careful how far you walk the plank. But walk some of the way to see your real options.

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Using my lender. They are not dragging their feet, however. We will have it closed in 45 days of signing the contract and within 30 days of starting the loan application.

Builder's realtor is arrogant as hell.

If the house were for me, I would walk. I am actually working this for my mother-in-law and the house is next door to her daughter (my sister-in-law). He knows this and I think he is taking advantage.

I know I screwed up by signing the cash contract with a short closing date (I'll take this up with my Realtor later), but I don't want to just bend over. Trying to keep from making a bad situation worse.

If the builder is willing to amend the contract from cash to 3rd party financing, there is nothing that says they can't extend the close date along with it...an amendment is an amendment. Did you all sign an amendment item?

AggiePlaya said:

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If the builder is willing to amend the contract from cash to 3rd party financing, there is nothing that says they can't extend the close date along with it...an amendment is an amendment. Did you all sign an amendment item?

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He wants me to sign the amendment. Catch is he also wants me to pay an additional $3,000 penalty (my word) per the clause in my contract that says - "$100/day plus interest in accordance with and at the maximum rate permitted by the Texas Property Code, or other applicable statutes, from the scheduled closing date until closing at the maximum interest rate allowed by law" by the original closing date.

I was wanting to extend 20 days. That is only $2000 for the $100/day portion of that. I am trying to figure where he is getting the extra $1000.

This is not refundable and would not go towards the purchase.

So ....What is the maximum interest rate allowed by the Texas Real Estate Code?

House is ~$375,000

Again tell him to pound sand,

Claim you got a lawyer and you are finding facts to this issue and will address the situation on Friday.

Then get a lawyer and discuss until then. If he says pay, pay, if he says I can charge you less then them, pay him.

I will consider this. Thanks.

Few more questions

Has appraisal been done?

Has the second underwriting review been done? Before or after the appraisal review?

Did you select title or the builder? If builder they are not your friend and is a partner with the builder.

Sorry

SteveBott said:

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Few more questions

Has appraisal been done?

Has the second underwriting review been done? Before or after the appraisal review?

Did you select title or the builder? If builder they are not your friend and is a partner with the builder.

Sorry

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My bank is doing appraisal. apparently this is most of the wait on their part. That and the new lending laws (or so I am told)

not sure about underwriting review.

I have the title commitment from the builder. This is not the issue. They are ready to close Friday. I just cant get my bank to be ready.

Again, Financing is moving forward as fast as it can and I have no issue with the time.
Her credit is excellent.

My issue is with the builder, or possibly the builder's agent. (Not sure the builder is actually aware this is all going on)

We are paying asking price and didn't fight about anything. I feel that because I changed from cash to mortgage and need a little extra time to get it done, they (he) is taking advantage of the situation.


If, on day one, I had signed a conventional mortgage based contract, there would be no issues. The contract actually says I would have 90 days. But, none of that applies because I signed saying I would pay cash.

I'm also in the mortgage business and don't think I'd tell the builder to eat a dick or pound sand. I wouldn't claim I had an attorney unless I actually had one. I don't think I'd engage an attorney since that would probably cost more than any potential penalties.

I would probably approach them and remind them both of you have the same desired outcome - you to complete the purchase and them to complete the sale.

I'd explain your financing situation changed from cash to mortgage and that you're within 30 days of your application which they'll understand is reasonable.

You might point out that if they have to move the house to inventory from sold they'll lose more than the penalties they're talking about. They already know this.

I have found refocusing all parties on the desired outcome has better results than confrontation.

We have been discussing this with him for a few days and he doesn't seem to care. He appears happy to walk with my escrow.

Is it wrong to call the builder directly? Go around his realtor.

Thinking about giving the builder a contract for the purchase price minus the escrow I already paid.

TexAg1987 said:

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AggiePlaya said:

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If the builder is willing to amend the contract from cash to 3rd party financing, there is nothing that says they can't extend the close date along with it...an amendment is an amendment. Did you all sign an amendment item?

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He wants me to sign the amendment. Catch is he also wants me to pay an additional $3,000 penalty (my word) per the clause in my contract that says - "$100/day plus interest in accordance with and at the maximum rate permitted by the Texas Property Code, or other applicable statutes, from the scheduled closing date until closing at the maximum interest rate allowed by law" by the original closing date.

I was wanting to extend 20 days. That is only $2000 for the $100/day portion of that. I am trying to figure where he is getting the extra $1000.

This is not refundable and would not go towards the purchase.

So ....What is the maximum interest rate allowed by the Texas Real Estate Code?

House is ~$375,000

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Consult a real estate attorney. I could be wrong, but with an extension of date that may reset the clock again so that NO interest would apply unless you passed the new date...again, I could be wrong so consult an attorney

I feel I understand the contract.

I am really here asking what the maximum interest rate is per Texas Real Estate Code?

If you are talking the difference between paying $3000 without an attorney or paying $2000 plus an attorney, I think you would be coming out cheaper paying the $3000.

EDIT - I am not a lawyer or real estate person, but have spent a good part o the past year pouring over the TX Prop code (specifically section 53), to deal with a mechanics lien placed on my property. FWIW, I don't recall or can see anything in the property code that surrounds what you have in your contract. The property code I don't think deals with closings and paperwork processes. Anything such as that I think falls under a general financial scope. Again, just my educated guess.

CapCity12thMan said:

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If you are talking the difference between paying $3000 without an attorney or paying $2000 plus an attorney, I think you would be coming out cheaper paying the $3000.

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No. I am asking what the interest rate is.

He is wanting you to cover his carrying costs (interest), what was original asking price?

aggiepaintrain said:

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He is wanting you to cover his carrying costs (interest), what was original asking price?

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Contract price is $366,810

Extension was for 20 days.

I really think it is worth reaching out to an RE attorney. They can likely answer your original question as well as advise you on the various methods suggested here EAD-Pound Sound vs. conciliatory. At worst will probably cost you $100 for a consultation, then a little more to write a letter to shut up the other side if you have legs to stand on.

Thanks everyone.

Have you talked to the builder? I'd bet it's at least 50/50 you can work it out to your satisfaction.

All this has been through the builders agent.

Doesn't sound like that's working well. Is there a reason you aren't talking to the builder?

That will be the next step.

We are making a counter offer. We will see where that goes.

The builder is a regional corp. so it is not quite like going up to Larry Marriott or something. Would need to talk to a VP of Sales. Supposedly this is all coming from them, so I don't know that it makes a difference.

I think I got my answer on the interest thing and they are probably within their legal rights.

You would think they would try and work a little harder to gain a good referral.

$100/day should be plenty to cover their carrying costs. The undefined interest rate is something I would push back on.

Not sure why your lender is 20 days off. That is huge delay. I'm off a day or two at times but never 20.

Your lender should eat this.

how far into the contract did the lender get pulled in?

SteveBott said:

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Not sure why your lender is 20 days off. That is huge delay. I'm off a day or two at times but never 20.

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My fault. We were intending to pay cash so closing was set for three weeks from contract date.

Change of circumstances on my part made me re-think it and we started the mortgage process about two weeks in. Originally just going to do a simple (or so I thought) bridge loan. Bank wanted the house we are selling as collateral, which started appraisals, etc. Bank wants/needs 30 days.

They have me over the barrel and I know it.

What ticks me off is that if I had done this as a mortgage (not cash sale) from day one, there would not be any additional charges and I would have 90 days to get all the financing in place. This is where I think they are taking advantage of the situation, although I signed up for it.

So, although I feel this way, it is probably not a legal battle I can win.

They are playing hardball and all I can do is warn others. I will wait until my deal is done, because legally they do not have to offer the extension at all and I would lose my earnest money, etc.