Can a builder force me to walk away from a fully executed contract or impose price increase after the contract has been signed?

We provided the entire deposit in August. In early October, we executed a change order to remove some options and builder provided some discounted options. After change order was executed, they came back 3 weeks later and tells that they made a mistake and that they can’t build the house at the agreed upon price. They are telling us to take our deposit and walk away or take on additional costs.

Asked on November 9, 2018 under Real Estate Law, New Jersey

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

It depends on what is meant by a "mistake."
1) IF all the information to calculate the correct price is in the contract, e.g. in the line items or subsections shown on the contract, but was simply totalled or added up correctly, then a court would, in litigation (if a lawsuit ensued) enforce the agreement with the correct total. That is because a mathematical or typographic error does not invalidate a contract and will be corrected by the courts, but again only IF the parties had available to them all the correct information. So if all the line or item costs were included and correct, so that you could see what the total should be and double check the math yourself, the fact that it happened to be totalled up incorrectly would not invalidate the contract. In this case, you'd have to pay extra or could take their offer to take your deposit and go.
2) BUT if there is no error in the contract itself--e.g. all costs add, total, etc. correctly--and the problem is outside the contract, such as the builder failing to check its own costs or profit margin and not seeing that it cannot afford the construction, that is their problem not yours, and you can enforce the contract as written against them. A party cannot get out of a contract simply because they discover it poses problems for them; if the contract is fully valid on its face, is can be enforce no matter the effect on the other party.


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