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37 U. Colo. L. Rev. 457 (1964-1965)
Problems of Buying a House Which Is to be Constructed

handle is hein.journals/ucollr37 and id is 481 raw text is: PROBLEMS OF BUYING A HOUSE WHICH IS TO BE CONSTRUCTED THOMAS C. SEAWELL* I. INTRODUCTION In recent times buying a house, whether built or to be built, has been regarded by the public as the simplest of transactions, only rarely requiring the help of an attorney, and in no event is such help considered necessary before the closing. Yet for many people buying a house will represent their largest single financial venture and, when the house is a custom or model home built specifically for them, the emotional involve- ment will doubtless be great. The task of choosing a site, selecting or creating floor plans, materials, fixtures, finishing items and the like is difficult and time-consuming. Hopefully, on moving day, the reward will be great enough to compensate for the many risks. The purpose of this article is to set forth briefly the common prob- lems encountered by a purchaser of a house which is to be constructed and to suggest the more feasible ways of avoiding or diminishing these problems. Real estate customs, the contract forms generally used by the industry and general law simply do not provide the purchaser with adequate protection. Yet protections of various types can usually be obtained by the use of well-conceived contracts without putting un- reasonable burdens on any other party to the transaction. These problems are found in any project requiring acquisition of property and construction of a building or other improvements. How- ever, the funds available for various types of supervision and protection, including attorney's and architect's fees, are much more limited in the instance of a house purchase. II. THE PURCHASER'S EXPOSURE The basic economic pattern of the transaction is rarely varied. In either the custom or model home situation the first step is for the purchaser to select the building site and decide upon plans and specifi- cations for the structure. At this point the basic price is determined, a contract of some sort is signed and the purchaser makes an earnest money payment. Normally the contract is contingent upon the pur- chaser's obtaining a permanent loan commitment and, when the com- mitment is obtained, a substantial down payment is required. At this stage the purchaser's investment will generally range from several hundred to a few thousand dollars. Upon completion of the structure, the balance of the contract price will be paid. *Associate Holme, Roberts, More & Owen, Denver, Colo.; A.B. Dartmouth College, 1959; LL.B., Colorado, 1962; Mr. Seawell is a former Editor-in-Chief of ROCKY MOUNTAIN LAW REvIEw.

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