How can I as the Builder Cancel a contract?

Question

Hello all,

I am in a bit of a pickle.  Started building a home that was under contract in January of this year.  Got a quote in May of this year on the lumber cost however just received the bill which is now about 30K more.  I believe I just signed the basic New Construction purchase and sale agreement.  Does anyone know of a Loophole that can help me cancel the contract?  I am in the State of Georgia

Sophia Berry · Answer

Sure.  The contract price is $360K. I just built a home next door that sold for $390K.  I wouldn't have a problem with keeping the contract price however the original quoted price for lumber in May was about 42K.  I just received the bill for lumber for 72K.

Joe Splitrock · Answer

@Sophia Berry of course consult an attorney, but I would also work to negotiate a solution that works for you and the buyer. As a builder, you should lock in material prices under a contract with your supplier or put a stipulation in the sales contract that pushes material increase expense on to the buyer.

One option is asking the buyer to pay the $30K added cost, without any markup so you are not profiting. This should still be a good deal for the buyer, since housing prices likely went up more than $30K since they signed the contract.

I just think as a matter of integrity, trying to honor your contract and not leaving the buyer high and dry is the best choice for your business.

Can you share the contracted purchase price and what the current market value is of the property? I am assuming higher?

Sophia Berry · Answer

Thank you. I don't believe there was a clause in the contract.  I just started looking for a attorney but there are so many.  A little overwhelming.  Any recommendations??

Theresa Harris · Answer

I agree with Wayne.  Talk to a lawyer.  Was there a clause the capped increased costs?  Where I am lumber prices are going back to pre-covid prices, so the fact that the contract was done in Jan and quote in May, they should have factored in higher prices.

Wayne Brooks · Answer

An attorney will be your best bet. We have no idea what clauses may be in your contract, force majure decisions/applicability in your local courts, etc.