A Lawyer Talks

Things to do before you sign a contract on a new house

By Walter Jowers

With spring just around the corner, I know a lot of folks are going to go out shopping for a spanking-new house. I encourage that, because I think life gets better the day you own your own house. There’s no finer life than the life of a mortgage-paying American.

Even so, in my little home inspection business, it’s my duty to meet new homebuyers, who are all giddy with anticipation, and tell them about all the defects I find in their new houses. Truth be told, it gets a little depressing. I’ve been finding the same defects for years. The builders keep making the same mistakes, and the codes inspectors keep letting them slide. They all know better, but a lack of time, a need for cash flow and some outright chicanery keep people stuck in the old, substandard way of doing things.

Here’s the recurring theme: New houses, given just a little time, get wet in places where they shouldn’t get wet. Water- proofing details such as roof flashings, wall flashings and deck flashings are usually wrong, and sometimes just plain missing. Basement and crawl space walls aren’t properly damp-proofed, so water ends up running through crawl space and basement walls. Because of all this, wood rots, mold grows and the house slowly self-destructs. Owners end up replacing rotten parts one piece at a time.

More and more, I hear from new-house buyers who believed that the builders’ warranties and salespeople’s promises would ensure a problem-free—and leak-free—house. Later, they found out their houses had problems. A fair number of these folk have had to lawyer up and sue—or at least threaten to sue—to get their houses fixed.

Well, I believe that an ounce of prevention is worth a trainload of cure. So I’ve asked Nashville attorney Jean Harrison to advise you on how to avoid new-house heartaches by doing a few simple and inexpensive things on the front end. Here’s what Jean says:

“The builder is not your friend. He wants to make money from you. Money and friendship don’t mix.

“Have an attorney review your sales contract before you sign. The best lawyer in the world can’t automatically undo the worst deal you may make, but she might be able to save you from making the worst deal in the first place. Don’t rely on the real estate salesperson to look out for your legal interests. That’s not what salespeople are trained to do.

“Understand that many real estate agents use a form contract, which is created by their company. That’s usually fine and good for the sale of an existing house. It’s usually not OK for the sale of a new house under construction. Those forms do not cover the things that need to be covered with brand-new construction. Have that lawyer I keep harping on look at the contract.

“Consider carefully before you agree to an arbitration clause. Arbitration, in and of itself, is not a bad thing, but there are plenty of circumstances where you will want to be in front of a jury. In a squabble over a $1,000 floor defect, arbitration is fine. In a case involving the structural integrity of a house, you’ll probably want to be in front of a jury. If the builder refuses to sell you the house unless you sign a binding arbitration clause, walk away.

“Read the builder’s warranty before you sign a sales contract. If the builder won’t give you a copy before the sale, run away. Understand that the warranty is going to govern your destiny as a new homeowner. Most (if not all) warranties are written to favor the builder, so don’t be surprised that it doesn’t cover an inch-wide crack in your wall. As every builder will tell you, that’s not a structural defect. It might piss you off, but the builder doesn’t have to fix it. Have that lawyer review the warranty to ensure you’re getting what you think you’re getting.

“Just because the house has a certificate of occupancy from the local codes guy, don’t assume you have a well-built house. The code is a minimum standard, and codes inspectors have been known to miss problems—sometimes big ones. Aim higher and get a home inspector or engineer to oversee the construction process. Even better, put a clause in your contract that calls for successful inspections at specific stages of construction by your inspector. Generally, codes departments are understaffed and overworked—don’t rely on them to protect your interests.

“Hiring a lawyer to review the contracts and warranty should not cost more than a couple hundred bucks in most cases. Since most folks are going to spend the biggest chunk of change they have on their house, why risk that investment over a couple hundred bucks?”

Makes sense, doesn’t it? The people who build and sell new houses may be fine human beings. But they aren’t going to alert you to building defects any more than the saleswoman at The Gap will tell you that the dress you like makes your butt look huge. When you’re about to spend tens, if not hundreds, of thousands of dollars, get somebody to look out for your end of the deal. The worst that can happen is that you’ll have to face up to some harsh realities.