KPRC 2 Investigates: Builder backs out of deal, leaves family with no home

Price locked in, still builder demands more money

We tell you every day that prices for just about everything are up. That includes building materials for a new home. It’s one thing to agree to pay the higher costs, but a lot of new home buyers are telling KPRC 2 Investigates that builders are demanding more money for homes after they’ve locked in the price and signed a contract.

BROOKSHIRE, Texas – We tell you every day that prices for just about everything are up. That includes building materials for a new home. It’s one thing to agree to pay the higher costs, but a lot of new home buyers are telling KPRC 2 Investigates that builders are demanding more money for homes after they’ve locked in the price and signed a contract.

One of the cardinal rules of any big financial purchase is to get everything in writing. But in these cases with new home construction, builders are throwing contracts out the window and leaving buyers in a lurch.

Homebuilder changes the prices after signing a contract. A Katy teacher says what is happening is not fair. KPRC2 Investigates. (Copyright 2020 by KPRC Click2Houston - All rights reserved.)

From an empty lot to the foundation, framework, and now walls, Christina Montalvan and her family watched their dream of a home in Brookshire take shape. They would drive past the home every week to check on the progress.

“And every time we go by, my three kids are like, ‘Mama’s house! Mama’s house!’ and my 3-year-old daughter, she likes going to see her room,” said Montalvan.

Christina Montalvan is a school teacher. She found the home her family could afford in a Brookshire subdivision in April 2021. She signed a contract with builder Manuel Cabrera for $180,000 with a closing date of October 29, 2021. In October the house still wasn’t ready.

“We’ve been doing extensions every single month,” she said.

Homebuilder changes the prices after signing a contract. A Katy teacher says what is happening is not fair. KPRC2 Investigates. (Copyright 2020 by KPRC Click2Houston - All rights reserved.)

When Montalvan’s apartment lease was up, her family had to go month to month while they waited for their home. This has been a great expense.

“Thankfully, my apartments allowed me to stay, but it’s $600 more a month, Which is more than one of my checks,” Montalvan explains.

Purchase price increased from $180,000 to $220,000

Then in April, she got a text from the seller’s agent. It said:

“Due to the ongoing and existing economic impact from the Covid pandemic as it relates to

both the building material, labor availability, and the subsequent increase in cost to build this

home the builder is informing that it has taken and exhausted the builders budget on the

construction of this house project. The builder is asking to either increase the purchase price

to $220,000 to match the truer cost it has taken to build this house or be released from the

contract and return the earnest money to your clients while he explores all options for the

completion of this house. He apologizes for this news and is equally discouraged as to what has

happened during this incredibly tough and unforeseeable building market. Thank you so

much.”

In seconds, Montalvan’s dream of a home was out of reach, $40,000 more. That’s when she called our Investigates team for help.

Issue: More builders are raising prices

We had real estate attorney Jonathan Randolph look through all of the paperwork. Randolph said he’s seeing a lot of builders going back on prices they agreed to as the cost of everything from lumber to nails to drywall adds up.

Real estate attorney Jonathan Randolph reviews contract between home builder and buyer. Builder is backing out of the contract, leaving the future homeowner in a bind. (Copyright 2020 by KPRC Click2Houston - All rights reserved.)

“This incident that she’s in keeps happening over and over,” said Randolph.

Some builders do have a clause in their contracts that allows them to raise the price of the home if their costs increase significantly. Montalvan’s contract doesn’t have that language.

“There’s no wiggle room for that contractor, that contractor is going to have to honor that contract as stated,” Randolph explained.

Except he’s not. The builder didn’t return our calls or email. A representative of the Greater Houston Builder’s Association told us these situations are having, “a greater impact on lower-end home builders with tighter margins.”

Buyers like Montalvan can’t pay for an attorney to hold the builder to their end of the deal. Meanwhile, the house sits incomplete and Montalvan’s family in limbo.

Homebuilder changes the prices after signing a contract. A Katy teacher says what is happening is not fair. KPRC2 Investigates. (Copyright 2020 by KPRC Click2Houston - All rights reserved.)

“My kids were like, ‘Mommy, Mommy, there’s our house.’ And I was like, ‘I don’t even know if that’s our house anymore.’”

The extension on the contract between Montalvan and the builder expires at the end of this month. She worries the builder will let it expire and then just sell the home to someone else for the increased asking price.

One option for Montalvan is to apply for legal help. Houston Volunteer Lawyers and Lone Star Legal Aid offer free legal help to people within a certain income range. Also, these organizations may not cover all legal matters.

How other builders are handling cost increases

KPRC 2 Investigates reached out to Lennar Homes. A representative told reporter Amy Davis Lennar will not increase the price of a home that is under contract with a customer after the contract is signed, even if the construction cost of the home increases.

Lennar is primarily selling homes during the construction process as opposed to pre selling the home prior to the commencement of construction.


About the Authors:

Passionate consumer advocate, mom of 3, addicted to coffee, hairspray and pastries.

Award-winning TV producer and content creator. My goal as a journalist is to help people. Faith and family motivate me. Running keeps me sane.