Construction and Purchase Contract (Builder-owned Lot) –Page 1
Builders Association of South Central Kentucky HBA Phone 270-781-3375
Contract No.
CONSTRUCTION AND PURCHASE CONTRACT
(Builder-owned Lot)
THIS CONTRACT, dated , 20 , between (referred to as “Builder”) and (referred to as “Buyer”) sets forth the agreement of the parties.
1. Builder agrees to sell and Buyer agrees to purchase the following described real estate together with the “Residence” to be constructed thereon by Builder:
Lot # ; Lot frontage (approx.): feet; Lot depth (approx.): feet
Subdivision: ; County: ; City:
2. Builder shall furnish all labor and materials required for the construction of the Residence in accordance with the plans and specifications and materials list signed by Buyers and dated . Unless otherwise agreed, the Builder shall determine the location and elevation of all improvements on the lot. Builder shall supply all materials and labor needed to complete the Residence. Builder shall not be responsible for any materials or labor supplied by Buyer. Except for structural integrity of the Residence, Builder is not responsible for the accuracy of plans supplied by the Buyer.
3. The purchase price shall be ($ ). Changes in the plans or specifications or materials selected, there will be additional cost unless otherwise agreed to by Builder. As a sign of good faith binding this Contract, Buyer shall deposit $ with Builder to be used by Builder as necessary and applied to the purchase price upon delivery of the deed.
4. Unless Buyer pays cash for the Residence, Buyer will immediately apply for financing for a loan in the principal amount of $ . Proceeds of this loan in that principal amount shall be paid to Builder at closing. Buyer shall present Builder with a written pre-approval letter not later than days from the date of this Contract. If the Lender imposes conditions to a final commitment, Builder may demand and Buyer, within five (5) business days, shall establish that Buyer can satisfy all conditions to the final loan commitment. For purposes of this paragraph, time is of the essence.
5. Unless otherwise stated, the purchase price does not include unusual excavation or grading costs resulting from ground terrain, rock, underground springs, relocation of utility lines, lack of sufficient soil on site, removal of tree stumps or other such conditions. If such work is required or if additional soil is needed, Builder shall inform Buyer of the unusual conditions necessitating such work and Buyer shall pay the extra cost based on .
6. Builder shall commence construction of the Residence as soon as practical after the signing of this Contract and adequate financial arrangements satisfactory to the Builder have been made by the Buyer.
7. Builder shall complete construction within working days from the start of construction, except for delays caused by changes or acts of Buyer, or any person employed by Buyer, acts of arbitration, failure of any subcontractor or materialman, fires, strikes, acts of public authority, inclement weather, allocation of materials priorities, delays or defaults by public or private carriers, shortages of materials or labor, acts of God,
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Construction and Purchase Contract (Builder-owned Lot) –Page 2
or other work stoppages, casualties, or other causes beyond the control of Builder. Builder reserves the right to make changes and substitutions in the construction as may be necessary because of the unavailability of materials through the Builder’s ordinary and usual sources of supply or as may be required by law, provided the changes or substitutions are of equal or better quality.
8. Buyer agrees that the direction and supervision of construction personnel, including subcontractors, rests exclusively with Builder or its duly designated agent, and Buyer agrees not to issue any instructions or to otherwise interfere with the same.
9. Buyer shall not negotiate for additional work with Builder’s subcontractors or engage another contractor or other subcontractors except with Builder’s prior written consent and then only in such manner as will not interfere with Builder’s completion of work under this Contract.
10. Buyer may request changes to the Work. If Builder agrees, Builder shall provide Buyer with a written estimate of the reasonable cost of each change including the Builder’s fee and Buyer shall immediately isgn the estimate and pay to Builder such reasonable cost. Should the actual cost differ from the estimate it shall be equitably adjusted. If Buyer delays in signing the estimate or paying the additional cost, Builder may proceed with construction without the change. Builder will not slow or stop the work because of disagreement as to change orders. Changes in Work may delay completion.
11. The closing date shall be within days after substantial completion of the Residence, with the date and place of the closing to be specified by Builder. On final payment by Buyer and upon Buyer’s request, Builder shall provide Buyer with an affidavit stating that all labor, materials and equipment used in the construction have been paid for or will be paid in full by Builder unless otherwise noted. At closing, Builder shall convey to Buyer an unencumbered marketable title, by general warranty deed subject to easements and restrictive covenants of record at the time of the closing, and applicable regulations imposed by governmental agencies.
12. All property taxes on the lot are due and payable in 20 , and thereafter shall be paid by the Buyer.
13. At the time of transfer of title of the lot and residence to Buyer, Builder shall execute and deliver to the buyer a home owners ‘limited warranty’ in the form attached as EXHIBIT A. Builder disclaims and Buyer waives, unless otherwise expressly provided for in Builder’s limited warranty, all warranties, express or implied, including but not limited to the warranties of habitability, merchantability, and fitness of purpose, and including any warranties that could be construed to cover the presence of radon or other environmental pollutants. BUYER AND BUILDER AGREE THAT SUCH LIMITED WARRANTY SHALL CONSTITUTE THE SOLE WARRANTY FROM BUILDER TO BUYER AND THE LIMITED WARRANTY IS GIVEN IN LIEU OF ALL OTHER WARRANTIES.
14. Possession of the lot and Residence shall be given on the closing date. At the time of closing, Buyer, if so requested by Builder, shall execute and deliver to Builder an acknowledgment of completion and release it as satisfactory to Buyer certifying that the lot and Residence have been accepted by Buyer and are entirely completed in every detail and releasing Builder from any and all claims hereunder. The acceptance of key or deed or entry into possession of the Residence and lot by Buyer is acceptance by Buyer of the Residence and lot and, except for matters covered by the limited warranty, constitutes a complete release and discharge of all obligations and liabilities of Builder with respect to the construction, completion and delivery of the Residence and lot and every part thereof.
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15. If Buyer defaults on any obligation under this Contract, Builder may at its option treat this Contract as null and void and retain all payments made under this Contract. In addition, Builder may pursue any other legal remedy available including specific performance. If Buyer causes a postponement of the closing beyond the closing date, then in addition to all other damages to which Builder may be entitled, Buyer shall pay to Builder for the postponement, an amount equal to % per annum of the purchase price for the period of delay. Buyer agrees to indemnify and hold Builder harmless from any and all loss, expense, costs, including but not limited to reasonable attorney fees, that Builder incurs which arise out of any6 default by Buyer in the performance of its obligations under this Contract. If Builder defaults on its obligations in this Contract, Buyer’s may pursue any remedy available at law.
16. If after Buyer takes possession, defects are claimed by Buyer, Buyer and Builder shall comply with the claim procedures in the limited warranty, including but not limited to the notice requirements.
17. If Builder fails to comply with the claim procedures in the limited warranty or if the parties are unable to mutually resolve any question with respect to the performance of this Contract, Buyer may contact the local Home Builders Association and request conciliation. The provisions of this last sentence shall not apply unless the Builder is at all times during the conciliation procedure a member of the respective Home Builders Association. The Association provides the conciliation procedures only as a service to its members and the home buyer and does not undertake or guarantee, expressly or impliedly, to perform any obligation of Builder resulting from such procedures.
18. Notice and Opportunity to Repair Act: If after taking possession Buyer believes a construction defect exists in the Residence, Buyer shall first comply with paragraphs 16 and 17 above. If those remedies do not result in a satisfactory solution, the parties shall implement the provisions of Kentucky’s Notice and Opportunity to Repair Act (hereafter, “NORA”). As described in bold below, to comply with NORA, Buyer and Builder shall take the following steps:
A. Buyer shall describe the claim in writing in reasonable detail delivered to the Builder;
B. Not less than twenty-one (21) days after receipt of that written notice, Builder shall send a written response to Buyer to arrange an inspection, offer to correct the defect or compensate Buyer for the defect, or state in writing an intent not to take any remedial action.
THE NOTICE AND OPPORTUNITY TO REPAIR ACT CONTAINS IMPORTANT REQUIREMENTS YOU MUST FOLLOW BEFORE YOU MAY FILE A LAWSUIT FOR DEFECTIVE CONSTRUCTION AGAINST THE BUILDER OF YOUR HOME. YOU MUST DELIVER TO THE BUILDER A WRITTEN NOTICE OF ANY CONSTRUCTION CONDITIONS YOU ALLEGE ARE DEFECTIVE AND PROVIDE YOUR BUILDER THE OPPORTUNITY TO MAKE AN OFFER TO REPAIR OR PAY FOR THE DEFECTS. YOU ARE NOT OBLIGATED TO ACCEPT ANY OFFER MADE BY THE BUILDER. THERE ARE STRICT DEADLINES AND PROCEDURES UNDER STATE LAW, AND FAILURE TO FOLLOW THEM MAY AFFECT YOUR ABILITY TO FILE A LAWSUIT.
19. The Arbitration Act: If the remedies available in the Contract, in the Warranty and through NORA fail to resolve the dispute, that dispute shall be submitted to binding arbitration. The parties shall mutually agree to the selection of an arbitrator or panel of arbitrators, however, each arbitrator must have arbitrated at least one
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Construction and Purchase Contract (Builder-owned Lot) –Page 4
previous residential construction case. If the parties cannot agree on an arbitrator or panel of arbitrators, the arbitrator or panel of arbitrators shall be selected in accordance with Kentucky Arbitration Act. In all cases, the hearing shall be conducted in accordance with the Kentucky Arbitration Act. Arbitration shall be conducted in the county in which the Residence is located. The arbitrators’ written decision shall be binding on the parties.
20. Litigation: If litigation becomes necessary despite alternative methods of dispute resolution, the prevailing party in the litigation shall recover his or her costs and attorney fees notwithstanding any contrary or conflicting provision of law.
21. The rights and obligations granted and assumed under this Contract shall apply to the heirs, administrators, executors, successors and assigns of Builder and Buyer.
22. Buyer certifies that Buyer has read the entire contents of this Contract and acknowledges receipt of a copy. This is the only Contract between Builder and Buyer and no verbal Contracts of any kind shall be binding.
23. If this Contract is offered through a licensed Realtor or broker, Builder agrees to pay a commission of % of the purchase price to upon closing and delivery of the deed to Buyer. No other commission shall be paid to any other broker or real estate licensee.
24. Builder shall attempt to preserve certain trees on the lot. However, Builder gives no assurance that some or all of the trees shall not be damaged or removed during construction or grading of the lot or installation of utilities and pipes. Builder shall not be responsible for the removal of any dead or dying trees after delivery of the deed.
25. Additional Provisions:
IN WITNESS WHEREOF, Builder and Buyer have signed this agreement on the date set forth below.
BUILDER: BUYER:
BY: DATE:
ITS: BUYER:
DATE: DATE:
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