Is it legal for a builder’s lender to prohibit the sale of home to a buyer if the buyer is already qualified for the loan with a direct lender?

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Is it legal for a builder’s lender to prohibit the sale of home to a buyer if the buyer is already qualified for the loan with a direct lender?

I’m purchasing a new home but the builder will not open escrow unless I speak with and have my credit re-run by their lender. I am already prequalified with a direct lender and have furnished proof of qualification of the loan to the builder.

Asked on February 22, 2019 under Real Estate Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

Yes, it is legal. The builder is not required to sell to any specific individual or particular person: you have no inherent right to buy this house. They can put limitations or restrictions on who they will sell it to, including that any buyer be approved by--or actually finance with--their own lender. If you are unwilling to do this, they don't have to sell to you, just as you have the right to not buy from someone requiring something you do not wish to do.


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