It seems that some new home builders are becoming tired of their buyers having phase inspections on the new home while under construction. They see it as a problem when the buyer finds a good Inspector that catches what the builder missed. Unfortunately builders are now making unbelievable demands on the buyer just so the buyer can protect themselves!
[tab: The Problem]
Phase inspections of a new home are very important to make sure that you are getting what you are paying for! Many people believe that the local municipality Building Inspections Department, the Authority Having Jurisdiction (AHJ), is performing extensive inspections to make sure that the home is built to proper standards. The reality is that the AHJ does not have the time and manpower to perform in depth inspections. Instead they very quickly spot check one or two things and trust the builder to do the job properly. Unfortunately that doesn’t always happen and improperly performed work can be missed or purposely overlooked by the builder. If you don’t have your own independent Inspector looking out for you then you will be stuck with the errors!
However the story seems to be the same quite frequently. A buyer wants a new home and goes out to look for the right builder. They think they have found one and then move to the negotiating stage. Eventually the buyer signs the builder’s provided contract and are now legally bound to the builder. It isn’t until after they sign the contract that the buyer then feels they need to have the home inspected as it is being built. The buyer then finds an Inspector to perform the phase inspections. It is usually then that the buyer finds out they have to have the builder’s approval to allow the Inspector on site to perform these inspections. That’s when the real problems start for the buyer!
So what are these problems? Quite simply the buyer has already signed an agreement without considerations for independent third party inspection rights. The builders who want to restrict or prevent your third party inspections know this full well as it was their contract you signed. Just like any change you make after the contract is signed you will be presented with a contract amendment to sign. When you approach the builder with the request for inspections many builders are now forcing you to sign and agree to new terms for your building project.
Some builders might have no objections and no additional paperwork or amendments for you to sign. For those builders it is a good sign of confidence that not only do they feel they are going to build the home well, but they also invite your third party Inspector in to give another set of eyes to help them catch any issues or problems early. After all why not let the buyer hire a third party and pay for them as an extra quality control measure? Some builders will place reasonable requirements on third party Inspectors, and the buyer, to help protect themselves and the build process. I have seen and been subjected to some of these builders requirements and fully understand and for the most part agree with them.
However many other builders have taken a complete opposite approach to third party Inspectors. They don’t want them there at all regardless of their reasons! These are the builders that place many unreasonable requirements and restrictions on both the buyer and the third party Inspector in an attempt to dissuade the buyer from having independent inspections. Some of the builders even go so far as to force the buyer to sign an amendment that states the builder can ignore the results of the third party inspection and do what they want anyhow.
If you would like to see what Inspectors are talking about with these unreasonable requirements and how they are being dealt with by the builder I have several links here to threads on bulletin boards. These are threads specific to Texas builders with two being very recent, and one older showing the problem has been occurring for awhile now. One even have copies of the agreements the builders are forcing agreement to.
As you can see the Inspection community is obtaining mixed results from refusing to sign or pressuring the builders to not force their requirements. Most times Inspectors are just telling the buyer they need to find another Inspector. Many of the requirements the builders are forcing are completely ridiculous! These requirements place liability on the Inspector that they should not have in the first place! They also severely restrict the Inspector from doing the job the buyer thinks they are receiving. No intelligent Inspector would even consider signing most of these agreements.
The one thread that does have a copy of a builder’s contract amendment and it bears a very close look! As Inspectors we can refuse to perform the inspection and leave the buyer to find another Inspector, less intelligent and desperate, who is willing to accept the terms and consciously rip the buyer off! However as a buyer if you were to sign one of these forms you could very well be signing away your rights to have any defect corrected in the home. You need to keep in mind that this agreement is an amendment to your original purchase contract for the home. Once signed you are agreeing to anything the builder places in there.
So are these agreements legal and can the builder force me to sign away my rights? I am not an Attorney but in my opinion from everything I have seen in my lifetime, and I have seen a lot, they are about as legal as can be! It is an unfortunate thing in our country today that anyone can force any terms on another in a contract as long as the terms do not violate any Federal, State, or local law. In other words a company can force you to sign away all of your rights as long as they do not have you agree to violate any law. That’s basically what this type of agreement does with the last section titled “BUYER ACKNOWLEDGMENT AND CONSENT”. Read that buyer’s agreement section, do a Google search on “legal definition of notwithstanding” and closely place it in the context of that agreement you are signing.
So what do you do? Read on for more!
[tab: The Solutions]
So how can you prevent from falling into the builder’s web? It is very easy and all you have to do is be prepared! As a buyer it is your money that is being spent regardless of how much financing is being provided on the home. As a buyer you need to take charge and not let any builder stomp all over you and take away your rights! Whether you plan to have third party inspections or not you still have to approach the buying process as if you will. Many buyers are lulled into a confidence in their builder only to find out later that the confidence in their builder was only a myth! Then when they approach the builder with their plan for third party inspections it is too late!
The very first thing you need to do well before you sign any paper from any builder for any reason is to locate a good Real Estate Attorney. The State Bar of Texas has a search function that can help you narrow down your search for an Attorney that specializes in Real Estate Law. Perform your due diligence and find an Attorney that specializes in new construction law, litigation, and purchase contracts for new construction. Even if you never use their services you have one located and on the ready if you need them. I would highly recommend that you do use them regardless if you won’t be having phased inspections on the home.
The next step is to locate several Inspectors that perform new home phase inspections. Again perform your due diligence and find several that you feel comfortable using. I say several as it might be difficult to have your top choice available when you start the new home phase inspections. By having several you should be able to find one with an open schedule when you need them.
I would also advise you to find a very good licensed Engineered that specializes in new home construction, specifically the foundation part of a new home. If you need a second professional opinion to motivate the builder to fix a major issue then a licensed Engineer might be able to help in that aspect.
Once you have these people lined up and ready then you can consider signing a builder’s contract. However I would highly recommend that you first have the Attorney review any builder paperwork that you are provided for signature and agreement. Ask your attorney if the agreements contain anything regarding your right to perform third party inspections, what it states, and how it might limit your rights? Have the Attorney draft any amendments to the paperwork that the Attorney feels will protect your rights and prevent any builder from taking advantage of you!
So the solution to the problem is very simple and that is to be prepared before you sign any builder paperwork. Only you can protect yourself from any of these practices by builders. Once you sign and agree to any builder requirements there is not much you can do.
[tab: Links and References]
PS Inspection & Property Services LLC is a full service home inspection and light commercial inspection company servicing the entire Dallas/Fort Worth metroplex. We strive to for the satisfaction of our customers in everything we do. Our services offerings include:
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