New Build Real Estate Contract Consultations
Are you considering purchasing a new build home? Unlike standard resale transactions that use Colorado Real Estate Commission (CREC) forms, new build contracts are drafted by the builder’s attorney and usually protect the builder before buyer.
Signing such a contract without a thorough legal review can pose potential risk: buyers unknowingly accepting terms that expose them to financial burdens, limit their ability to address construction defects, and transform their homeownership dream into a costly and frustrating reality. Understanding new build contracts is essential for safeguarding your investment and ensuring your dream home doesn't come with unnecessary complications. GLO helps you understand and negotiate builder-drafted contracts, identify risks, and secure terms that protect your investment.
Why You Need Legal Review for New Build Contracts
Unlike the balanced Colorado Real Estate Commission (CREC) forms, these agreements can include provisions that shift liabilities to the buyer in ways that can go unnoticed. Common clauses allow builders to delay completion indefinitely due to factors like weather, labor shortages, or material delays—without penalty. This can leave buyers covering unexpected housing costs, risking mortgage rate expirations, or jeopardizing the sale of their current home.
Broad "force majeure" clauses that excuse builder performance for an extensive list of unforeseen events, effectively absolving them of responsibility for delays or non-completion under a wide array of circumstances. Without an attorney to dissect the terms and negotiate for more balanced provisions, buyers are often left with limited recourse, bearing the brunt of the builder's operational challenges and contractual advantages. It is important to acknowledge the load builders have, but it is the attorneys job to ensure that the buyers needs and expectations are being met in an complicated and atypical situation.
Understanding Limited Warranties and Restricted Remedies
New build homes in Colorado come with implied warranties, such as habitability and good workmanship—but builder contracts can limit or redefine these protections. Many impose narrow timelines for reporting defects, require multiple repair attempts, or create complex procedures that make it difficult for buyers to enforce their rights.
Remedies are frequently restricted as well. Contracts may limit compensation to repair costs only, excluding damages for inconvenience, loss of use, or diminished value. In some situations, the right to jury by trial is waived or the contract requires binding arbitration- something less favorable as a consumer. Without legal review, buyers risk unknowingly agreeing to contracts that don’t support the buyer and their expectations. GLO helps you understand these provisions before you sign—so your rights aren’t undermined when you need them. Read Colorado Home Warranties: Your Essential Guide to Protections in New vs. Existing Homes to learn more.
Being Aware of Potential Cost Changes and When Earnest Money is Refundable
Builder contracts can contain financial provisions that surprise buyers with added costs or lost deposits. Escalation clauses, for example, allow builders to raise the purchase price due to rising material or labor costs—even after signing—potentially pushing the home beyond the buyer’s budget.
Additionally, while a resale contract typically provides robust protection for earnest money if financing falls through, builder contracts may contain clauses that make earnest money largely non-refundable or easily forfeited to the builder for even minor buyer defaults. This means that if a buyer's loan approval is delayed, their financial situation changes, or they simply cannot secure the necessary financing, they could lose a substantial deposit, even through no fault of their own. The allocation of closing costs can also differ significantly, with builder contracts often shifting a greater portion of these expenses onto the buyer than is customary in resale transactions. Without an attorney to meticulously review these financial provisions, identify potential pitfalls, and negotiate for more equitable terms, buyers become susceptible to unexpected financial burdens, the loss of their earnest money, and a less favorable overall financial outcome for their new home purchase.
How GLO Can Help
At GLO, we provide comprehensive and tailored legal support specifically designed for new build homebuyers, empowering you to navigate the complexities of builder-drafted contracts with confidence. Our services begin with an exhaustive Contract Review, where we analyze every clause of the builder’s purchase agreement, identifying builder-friendly provisions, explaining their implications, and highlighting potential pitfalls that could impact your rights or financial well-being. We conduct a thorough Risk Assessment, pinpointing potential liability issues and advising on proactive strategies to protect your interests as a buyer, from negotiating more favorable terms to understanding your remedies.
Our approach includes a dedicated consultation to discuss the contract in detail, address all your questions, and provide actionable recommendations tailored to your specific situation. We emphasize the importance of securing a review clause in the contract, granting you a specified number of days to consult with legal counsel before the agreement becomes irrevocably binding. Beyond the initial review, establishing an attorney-client relationship with GLO ensures you have access to ongoing legal support should any disputes or issues arise during or after the purchase process, providing a continuous layer of protection. By consulting with GLO early in the process, you can avoid unfavorable terms and hidden risks, ensure a smoother transaction, protect your significant investment, and proactively address potential issues, rather than reacting after problems have already emerged.
Contact GLO today to ensure your new build purchase is protected, informed, and structured for success.
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