Months after signing, builder cancels new home contract

You sign a deal to build a home, then months later the builder cancels the contract?

It happened to a group of home buyers in Durham.

Devastated, one of them reached out to 5 On Your Side’s Monica Laliberte for help and got it.

The buyer, Bea Nieves, was shaken when her builder, Eastwood Homes, suddenly canceled the contract she had signed back in February.

"It’s very upsetting," said Nieves. "It’s very upsetting because now I’m priced out of the market. I’m totally confused how they can get away with it."

She bought a town home in Durham’s Highland Park, for $309,000 – Lot 96, which still had the sold sign on it.

In an email sent nearly four months after the contract was signed, an Eastwood Homes sales agent explained the company "doesn’t own the lot where her home was to be constructed," saying it wasn’t "recorded or purchased," and because of that, they said "we legally have no contract."

The agent apologized for the error adding "usually there is an unrecorded lot addendum signaled at contracting which was admittedly missed here."

"I just did a double-take because that doesn’t happen. You don’t just cancel contracts that are signed by both parties," said Jennifer Stark, Nieves’ realtor. "They said they had just made the hard decision to cancel because those particular lots had not been recorded yet and the cost was going up so dramatically to build."

Stark says an Eastwood Homes representative told her the company canceled nine contracts, that they’d refund the earnest money, and Nieves and the others could repurchase the homes.

"They would give the clients the opportunity to buy them back … at the new price," said Stark.

Laliberte asked if this was all about selling them for more money.

Stark said, "That’s my impression."

Construction costs are rising.

And Nieves pointed out, the development isn’t far from where Apple is expected to be building a new campus in Research Triangle Park.

5 On Your Side reached out to Eastwood Homes.

Attorney Allen Nason repeated they don’t own the lot so, he said, "The contract doesn’t exist," adding they hope to re-contract with Nieves.

5 On Your Side spoke with Durham real estate attorney, Sam Pinero.

"That’s generally not something you have to worry about, about whether or not your builder owns a lot that they’re selling," said Pinero.

Still Pinero adds, a contract can be broken even after it’s signed.

"There’s always a chance that it doesn’t make sense for somebody to perform in a contract. It doesn’t make financial sense. So it doesn’t surprise me that someone might want to get out of a contract that didn’t make sense financially," said Pinero.

A caveat though, he says typically, whoever cancels also offers a settlement.

"It’s really gonna depend on a case-by-case basis. Generally you can come up with some kind of settlement agreement between the buyer and the seller. If you ever have to go to court, then a jury decides," said Pinero.

Nieves won’t have to take it that far.

On the same day that 5 On Your Side contacted Eastwood Homes, the company called her with a message that changed everything.

"They found a new builder and now they were able to get the lots recorded. They said that the contract was going to be honored with the same price, so nothing was going to change, and I’m really grateful for that," said Nieves.

5 On Your Side reached back out to Eastwood Homes for an explanation of the sudden change.

After initially saying he’d be happy to talk, Nason emailed saying, "Legal counsel has reached out to me and is seeking to discuss matters with Eastwood Homes. Accordingly no further comment can occur."

Nieves is ecstatic her deal is moving forward,

She hopes to close and move in early next year.

5 On Your Side will check back in with her.