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Last edited by Lexi; 11-04-2019 at 09:11 PM.





If the contract had a specific date, and you seem to suggest it did, the builder breached the contract when he didn't fulfill the specifications regarding the time limit.
Under NJ law your down payment should have gone into escrow [double check with your lawyer on that] so even a bankruptcy shouldn't be an issue since the money should be in an interest account earmarked as yours.
I wouldn't let this languish too long. It is already almost two months past date and as you pointed out the market is in trouble. If you don't act quickly, and this guy is in over his head, you might find yourself at the end of the line of a long list of creditors looking for their money.
Don't forget liens against any plots of land the contractor may own to secure your debt against him. If he doesn't come up with the cash, you take the land instead.
Last edited by Golden_Rule; 07-20-2008 at 05:56 PM. Reason: spelling
Fiat justitia, pereat mundus.
BTW, while we are on the subject, is it needed to point out the obvious: That it is just possible that if you are willing to judge the worth of someone simply by what you read on a website about them it might say a whole hell of a lot more about you than it says about the person you are judging?
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Last edited by Lexi; 11-04-2019 at 09:12 PM.





Do you think he would be able to claim bankruptcy and take my money?In New York, there are a whole bunch of potential ways this could have been set up ... and in turn a whole bunch of different ways that your down payment money could have been 'handled' by the homebuilder or mortgage lender ... and in turn a whole bunch of different scenarios could apply if the homebuilder goes bankrupt !!!but I was purchasing the house in New York State. Does the money also go into escrow as well
First question by any NY attorney will be whether or not the transaction was handled under the 'cover' of a third party financial institution as mortgage lender, versus a direct transaction between you and the homebuilder with subordinated mortgage financing. If it was the former, then yes your 'down payment' money would have been placed in an escrow account. But if it's the latter, the door is open for ...
A. the homebuilder considering your down payment money as a 'progress payment'. If this is the case, then the argument will be made in bankruptcy court that your money was used by the contractor for property title / local code compliance research, for architectural design / analysis of your new home's construction blueprints, or any number of other 'legitimate expenses' towards your new house ... which would pose a major obstacle to any 'refund' of down payment money the contractor has already 'spent' under any circumstances (even though no end product resulted from the contractor's expenditures).
B. the homebuilder considered your down payment money as part of a contractual package which was aborted due to 'force majeure' ... in which case you become just one more in a long list of creditors who are all entitled to X cents on the dollar's worth of recovered asset value when the contractor files bankruptcy and remaining assets are liquidated.
A lot of 'contractor / developer financed' new home sales have occurred in the last few years ... which unfortunately don't carry the same recourse as a conventional bank financed mortgage loan.
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Last edited by Lexi; 11-04-2019 at 09:12 PM.





I'd definitely sic your attorney on this guy ... big time. Since you dealt directly with this developer / builder, there's a fairly high probability that your 'down payment' money has not been escrowed. Again, in New York there were lots of open avenues regarding how developers were required or could have chosen to structure 'design/build' contracts.The payment went directly to his company name. Now, he has not even broken ground.
I would also speculate that, if this developer was operating on a business model that involved the purchase of a parcel of farmland adjacent to popular suburbs, he's probably in a situation where the per-acre price he originally paid to obtain the farmland parcel was well above the market price for that same farmland parcel today. As such, the developer is now probably millions of dollars short in the 'equity' department needed for the developer to obtain additional loans - meaning that his former lines of credit which are vitally needed for him to build access roads / water and sewer mains / have probably dried up.
This isn't the only place where this problem is killing 'exurban' real estate development projects. The problem boils down to the amount of developer 'front money' needed to install the necessary infrastructure ( roads, water and sewer mains, etc. ) before the first house can be built ! The farmland equity problem is only one aspect too - there is probably also a big issue with other potential home buyers backing out of their deals and/or stiffing the developer as mortgage lending creditworthiness standards have tightened over the past few months. If the housing development was sized for say 50 new homes, and the developer's cost of installing the roads, sewer & water mains was $2 million, that translated into $40k per new home which was a reasonable amount to tack on to the home's basic construction cost and the developer's farmland property cost. But if there are only 10 remaining new home buyers who can still obtain mortgage financing, that $40k 'nut' rises to $200k per new home ... which is impossible for the developer to pass on. As such the developer's original plan to net a $50k or whatever profit per new home instantly mutates into a $110k LOSS per new home for the developer if he spends the money on the roads, water & sewer mains. Under this scenario, the developer will probably elect to cut his losses ... with as much customer front money as possible still in his pocket !
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Last edited by Lexi; 11-04-2019 at 09:12 PM.
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