FACTS:                    

The buyer entered into a contract with a national builder, using the builder’s form contract, for a new home to be constructed.  The buyer has delivered $95,000 to the builder through the course of construction as required by the contract.  The contract required that the home be completed and escrow close by November 1^st.  In mid-October, the builder notified the buyer that the home will not be completed until March 15^th, at the earliest, three and a half months late.  The buyer wants to cancel the contract and be refunded the $95,000 paid to date.

ISSUE:                      

Does the buyer have the right to cancel the contract and have the $95,000 refunded?

ANSWER:                

See Discussion.

DISCUSSION:         

Whether the buyer has the right to cancel and be refunded the $95,000 paid to date depends on the language of the contract.  Most builder standard form contracts provide that funds paid during the course of construction are non-refundable to the buyer in the event of a buyer cancelation; they also typically give the builder some flexibility on the date by which construction must be complete and close escrow.  Assuming the contract signed by the buyer has those type of provisions, the buyer will likely not be able to cancel and have the money paid refunded.  Independent legal counsel should be consulted.