I am buying a home from a builder, and the builder added a clause that i couldnt sell the house for 12 months?

Question

i would think this is illegal.....it reads the following;

Buyer will not openly market the unit, or allow another party to openly market unit for a 1 year period starting on the date of the close of escrow on the purchase of the unit of the buyer. The term "openly market" means any marketing efforts including, without limitation, (a) listing the unit with any licensed real estate agent or listing in the Multiple Listing Service or its equivalent (b) advertising the unit as "for sale" in any manner including, without limitation, any form of media or physical signage

If this was legal, i would think lenders would put this is in loan documents long ago. Instead, lenders utilize prepayment penalties...... i need to find the statute that protects individuals and enables them to sell real property at any given time

Answer 1

they do this to protect the other homeowners in the community from investors

Answer 2

Technically, the builder can put anything he wants in the contract. It's up to you whether this is a big enough issue to prevent you from signing it. Just know that as soon as you sign that paper, you're legally bound. For example, my neighbors are all raising a big stink because membership in the Homeowner's Association is required by their deeds. They're trying to fight it, but since they signed the documents, they have no leg to stand on and will lose the fight. Are you intending to live in the home? If so, it really shouldn't be an issue, unless you feel the need to buy a new home every 6 months.

Answer 3

I see these types of clauses all the time, but I have never heard of a builder actually going to court to enforce it.

Contracts can be negotiated. Tell the builder that you do not want to be bound to this contract provision, and that you will sign the contract only if this provision is eliminated or modified. Who knows... the real estate market is so pathetic these days that builders are willing to do almost anything to make a sale.

Answer 4

Why would this be illegal? You can negotiate it out if you don't want to tie up the property.

Lenders don't put this in loan documents because they get paid either way. Either you stay in the home and pay interest or you pay their penalty.

I would consider it highly unlikely that any statute exists to support your cause.

Answer 5

you must be using his lender
get your own lender and if you need to sell before 12 months are up you can. and you can Always mark it out of contract and call his bluff, they do this because they don't want to lose the loan

not wise to do this though, if you think you might move that quick don't buy rent.
you wont get your money out of it that quick. usually take about 5 years.
and it is a buyers market.

Answer 6

The builder is not preventing you from selling the house. He's limiting your ability to MARKET it as 'for sale'. If someone came to you and offered to purchase your house, you would be free to sell it. Same would apply if you quietly found a buyer on your own.

This builder is protecting himself from a bunch of 'for sale' signs in a subdivision where he desires to continue to build and sell other units.

Answer 7

He most likely has other homes for sale in the development and does not want to have to be in competition with you. He is assuming all his will be sold by then, and then it doesn't matter what you do. Its no big deal. Did you not plan on staying 1yr anyway?

Answer 8

I assume you are moving into a neighborhood that contains several homes by this builder. He doesn't want people flipping his houses while he is trying to establish a nice neighborhood. He wants people to buy and stay, so it looks like a settled neighborhood.