Some homebuyers say builders are cancelling contracts

The American dream is turning into a nightmare for some homebuyers. Some say builders are canceling their contracts and putting the homes back into this hot real estate market at much higher prices. 

But builders say lumber and construction costs have skyrocketed above original selling prices. 
"We got to pick out all of our finishes, really make it ours and it was special. And then I found out, we were pregnant," said Dana Clark-Pelletier of their dream home.

"When we were told it's going to be taken away, it kind of really struck us. We designed this house specifically for us," said her husband Mike Clark-Pelletier.


The Pelletier's say just when the home was finished, they were told their VA home loan fell through. They say the home was relisted at a higher price.

"When we got another lender, they canceled our contract. They said we couldn't. So we went back and looked at our contract and our contract said we could use whatever lender we wanted to. So then we had to get legal involved," explained Dana Pelletier.

Abigail Moreland says her homebuilder told her she was out of contract when she needed ten more days to close. But she says there had been three months of construction delays.

"So of course, now that the house is finalized, we're out of contract. You know, conveniently. I felt like it was conveniently, we're out of contract," said Abigail Moreland.

Her sister and realtor Lauren Moreland says the builder offered to sell it to Abigail for $85,000 more, and when she didn't buy it, relisted it for $200,000 more than the original contracted price. She says she's hearing similar stories from other realtors.

"The builders were finding any little, minor, itty, bitty loophole to get the clients out of the contract, so they could put it back on the market at a grossly increased price," said Lauren Moreland.

"It's definitely something we've noticed this year. The number of people calling with issues with their builder/seller," said real estate attorney Cris Feldman with Feldman & Feldman.


He says builders are utilizing clauses in their contracts.

"Some catchall, otherwise rarely used provisions are being employed by the builder to get out of the contract," said Feldman.

Why? The Texas Association of Builders says lumber, material, and labor shortages are creating an unprecedented spike in construction costs.  

"If homebuilders and buyers entered into a contract prior to the runup in these material prices, or early on, that contracted price may not be enough to cover these radically increased material costs," said Scott Norman, TAB Executive Director.

"A contract is a contract. Those clauses are in there, in some of them," he said.


The Clark-Pelletiers were finally able to buy their home and are now preparing for their new baby.

"If we had not gone to the media or gotten an attorney, it would not have worked out in our favor," said Dana.

We contacted the Pelletier's and Moreland's builders, but have not heard back.

Homebuyers can take steps to protect themselves: 

  • Have a lawyer review the contract.
  • Buy a complete or nearly complete home.
  • Use a Cost Plus contract, where the buyer agrees to pay for some unspecified costs, but can be limited to a Gross Max Price.