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Home>Levelset Community>Legal Help>In lieu of closing on a known defective house and then sue for damages can't I just get my earnest money back?

In lieu of closing on a known defective house and then sue for damages can't I just get my earnest money back?

ColoradoConstruction ContractDefects

I am under contract on a new build that has lots of defects including a missing steel I-beam and support posts in the basement. The house isn't even finished and the foundation walls and slab floor have cracks. Drywall on the main floor has numerous cracks in the ceilings and walls. The flatwork in the garage is shoddy and humps in the middle not allowing the garage door to close all the way. There are so many problems and I am supposed to close in 6 weeks. I no longer want this defective pit and want my earnest money returned. I spoke to one attorney over the phone and he said if I don't close then the builder will likely sue me for the entire amount of the purchase price. How is that possible? I have engineer reports and tons of photos.

3 replies

Feb 24, 2023

I am sorry, but no you cannot unless the contract allows this. I can say with almost 100% certainty that it does not. 

If you don't close, you can guarantee they will keep the deposit and they may sue. They may not, but a breach of contract is the claim. 

How is this possible? It is possible because there is no law that provides you can back out of a contract based on your allegations. and you can only do this if the contract states you can which, again, I would consider as incredibly unlikely. Review the contract to be sure. 

You either sue now, don't close and sue then, or close and sue later. This assumes there are not dispute resolution terms in your contract which are very common. If there are, then you must follow those procedures. 

You need to hire an attorney and pay for legal advice. Maybe they can negotiate a resolution. There is no way you have any leverage in this without an attorney. 

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Feb 24, 2023

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Feb 24, 2023

You need a lawyer! If you close, you have a massive lawsuit, very difficult and expensive. Two legal theories, 1, anticipatory repudiation (I'll explain) 2. Rescission , terminating the contract and restoring the parties to where they were before the contract. Call w/questions.   

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