A new-construction purchase agreement is drafted by the builder, for the builder, and it is usually much longer than a resale contract. Most of it is standard. Six sections are where buyers most often get surprised later. Read these slowly, and if the dollar amounts involved concern you, have a real estate attorney review the contract before you sign.
Last reviewed June 1, 2026
Look for the difference between an “estimated” completion date and a firm one, and read what happens if construction runs long, including whether you have any right to walk away, and after how many months. Builders commonly reserve broad rights to extend timelines for material shortages, weather or permitting delays; know what recourse, if any, you actually have before you need it.
On new construction, your deposit is often held by the builder rather than a neutral third party, and the contract will state under what conditions it is refundable versus forfeited. Read this section closely. It is the clause most likely to cost you real money if you need to back out of the deal.
Allowances set a dollar budget for categories like flooring, countertops or fixtures. Understand exactly what happens if your selections cost more than the allowance, including how the overage is billed, when it is due, and whether change orders can affect your closing date or financing.
Many builder contracts require disputes to go through private arbitration rather than a jury trial. This is common in the industry and generally enforceable, but it changes your options if a serious dispute ever arises. Know whether it is in your contract before you sign, not after a problem starts.
Confirm exactly how long you have to secure financing and what happens to your deposit if you cannot. Also check whether the contract addresses an appraisal gap, meaning what happens if the home appraises below the contract price. On new construction, this matters even more than on resale, because there is often no recent comparable sale to point to.
Understand the process for your final walk-through: how incomplete items get documented, whether they must be fixed before closing or after, and what the builder's written warranty actually covers and for how long. Get every promise made in the sales office confirmed in writing in the contract or an addendum. Verbal assurances are not enforceable.
A builder contract is written to protect the builder. Reading these six sections slowly, and having an attorney review anything involving real money, is how you understand what you are actually agreeing to before you sign.
Last reviewed June 1, 2026. Legal and financing information above is general education, not legal, tax or lending advice for your specific situation.
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