Am I right to pursue an action for costs associated with building a house that fell through on the builder’s side due to his lack of financing?

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Am I right to pursue an action for costs associated with building a house that fell through on the builder’s side due to his lack of financing?

We had a to-be-built house under contract with a builder before he obtained financing from his bank. When he approached his bank about financing the project (after he already signed a binding contract to build the house), he was denied financing. In the meantime, we had already ordered an appraisal, credit reports, etc. to solidify our mortgage so we had a clean commitment letter. We will be charged these fees shortly but we feel we should not have to pay these and that the builder should reimburse us for them due to the fact that he did not follow through on building the house.

Asked on January 19, 2012 under Real Estate Law, Maine

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

If you had a contract to purchase a structure with the seller and the escrow failed to close due to problems with the builder being able to get financed to build the structure where you incurred certain expenses in reliance upon the builder's representations, you have a possible legal and factual basis to seek reimbursement from the builder for these expenses.

The fees for the appraisal, credit report and the like should be sent to the builder for reimbursement by a certain date. If not paid by that date, your recourse seemingly would be small claims court.


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