IS THIS BREACH OF CONTRACT

My wife was diagnosed with cancer in 2015 and was unable to climb stairs. So, we built another home with the Master Bedroom Down stairs. We chose our front elevation of the home to be 100 brick and added a Drain in the back yard for the outdoor kitchen. Because of the all the medical appts my wife had during closing, we hastily signed for our home in may 2016. We decided to put a shed in our back yard and paint it the same color of our home. This is when we out the Trim was not correct on our house and contacted our builder and they trimmed it the correct color. We decided to go through our contract and found out that the 100 brick elevation was not 100 and there was wood on the from of my home. We also found out that the drain for the outdoor kitchen was not installed either. We talked to our builder and they refunded us 895 for the Brick and 495 for the drainage which is what we paid. All this money was included into our mortgage and interest will incur on it. We still have the checks that they sent us not cashed yet, but we are not Happy with the home We would like to have them pay the interest on this. Do we have a breach of contract case?

Asked on July 20, 2017 under Real Estate Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

They have already refunded the money to you, so you do not have a case against them any more: that case was settled by "accord and satisfaction"--by you already receiving everything to which you are entitled. You are not entitled to the mortgage interest on that money because that is not a "reasonably foreseeable" outcome of a failure to use the right materials or to install drainage--that is, most of the time, a construction error has no effect on your mortgage. When a loss is not sufficiently reasonably foreseeable, it is not recoverable. And, as a practical matter: you don't indicate what your mortgage rate is, but it's probably around 4%. 4% of $1,390 is only around $53 per year. Over the life of a 30-year loan, it's a total of around only $1,590 or so dollars. Not only is that amount not really worth a lawsuit over, but since you'd be getting 30 years of payments all at once instead of waiting 30 years for them, they'd "reduce to present value" anything you did win by discounting it for inflation, or around 2% per year, which would effectively halve the amount to around $800. So even if you could prove that this was  reasonably foreseeable loss, you'd probably be suing for only around $800.


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