New home builder refund of deposit

Question

I paid a deposit of 5000,00 on a new home to be built within 15 months, (verbal) there is no time stipulation written in the contract but it's passed that timeline and now won't be done for at least another 18 months they are saying because of weather and materials. Should I just take this to small claims on my own or hire an attorney? Also the fact that the house will now cost me more because of the higher interest rate. which will be higher by the time house is completed.

Answer 1

If the dispute is over the return of a $5000 deposit, that is probably small enough that it can go to small claims court (the limits are set by the particular state). However, consulting an attorney may well be a wise idea, so that you know how to make your case. The problem is that it's apparently you who wants to break the contract (because you don't want to wait for the contractor to do the job).

The basis for a suit that would be most advantageous to the plaintiff here would be that the contractor has breached the suit w.r.t. the deadline. Since there is no written contract, the dispute would hinge on exactly what was said, for example did he promise to complete in 15 months, or did he say that such projects typically take about 15 months? Is 36 months an unreasonable time frame – if so, that would favor the plaintiff. Then the dispute would focus on issues of weather and supplies, and whether in light of those facts the contractor had delayed the work unreasonably. In my city, 15 months is an unrealistically short time, 36 months is more typical. It's not that you can't DIY these arguments, but discussing the argument with an attorney could help you correctly frame the legal argument.

Answer 2

Be very, very careful

It looks like you want to terminate a contract and, from what you describe, it appears you do not have a valid cause to do so. That's called repudiation and it allows the builder to sue you for damages. In general, they will be entitled to claim any costs incurred to date and the profit they reasonably expected to make on the contract - this could be considerably in excess of $5,000.

The reason you have no valid cause is that the builder has not breached to contract. The contract specifies no start or completion date which means that the work must be done within a reasonable time. 3 years is a long time but it isn't at all clear that it isn't a reasonable time. The contract may allow the builder an extension for inclement weather (most do) and supply-chain issues beyond the builder's control (many do) - which means that any delays attributable to those don't count in the assessment of reasonableness.

Before you cancel this contract, you should consult a lawyer.

In addition, in the current inflationary environment, if you have a builder who is willing to stick to their price, I would think long and hard before cancelling the contract. Any new builder is likely to want considerably more. Global building material prices have risen 10-20% so far this year when you can get the materials at all. Of course, your builder may be really happy to cancel the contract and give you your money back.