Duped by Developer or Deficient in Due Diligence?

By
Real Estate Broker/Owner with Providence Group Realty TREC# 0608931

An interesting lawsuit is making real estate headlines in the DFW Metroplex.  A Fort Worth man has accused a developer of fraud and is suing for more than $1MM after learning his new home was not aligned to the school district he says he believed it to be in when he purchased his lot and completed construction. 

It is easy to see both sides of this case. The developer's marketing was positioned toward one particular school district, although the developer's spokesperson claims that school district alignment  -- showing that a number of the subdivision's homes were actually located within a second district -- was openly disclosed in the community's lot brochure. 

We compared GIS data to see what information is publicly available, and noted  the horizontal line highlighted on the developer's brochure above does represent the school district boundaries across this subdivision. 

The problem with this is that the GIS data reflects boundaries as of today's date. Back in 2011 (when the buyer purchased his lot), the public data may not have been accessible to the general consumer, as is often the case with newly developed subdivisions. Readers who have ever tried to use Google Maps to find a builder's model home under it's shiny new address will understand. :-)

If the buyer was solely reliant upon the information & disclosure provided by the developer, it may come down to 'proof' of disclosure (or non-disclosure) to settle the dispute. 

We are not informed as to whether the buyer elected to deal directly with the developer, or if he leveraged Buyer Representation when he purchased his lot.   We are of the opinion that the buyer may have been unrepresented, as no Brokers appear to be named in the lawsuit. 

Although Realtors® do tend to be better equipped to 'run the traps', new developments can be tricky to sort out. The fundamental rule of thumb is caveat emptor, which is Latin for "let the buyer beware." 

We also know that particularly when we work with developers and builders as sellers, that we will be forced into a position of using their proprietary forms in lieu of our standard promulgated forms, and that the proprietary forms will stack the deck in the seller's favor. Thus, the Buyer Party's job of being a 'details detective' becomes even more important toward protecting the Buyers' interests in the transaction. 

Before making an offer, a wise buyer and careful Realtor® will work to verify or seek out answers for the following considerations when purchasing a vacant lot or vacant land: 

  • Lot to Construction Cost Ratio
  • Land Use
  • Access & Road Maintenance
  • Lot Fit / Plan Suitability
  • Dirt Work
  • Soils Report
  • Building Restrictions
  • Seasonal Views
  • Flight Paths
  • Parcel Boundaries
  • City Limits
  • County Lines
  • State Lines
  • School Feeder Alignment
  • Zoning
  • Exemptions
  • Governing Entities & Jurisdictions
  • Impact Fees
  • Municipal Services
  • Permitting requirements
  • Water& Mineral Rights (& Leases)
  • Deed restrictions
  • Ordinances
  • Covenants
  • Easements
  • Right of Way
  • Capital Improvement Projects
  • Flood Zones
  • Environmental Hazards
  • Future development
  • Protected Reservations or Common Interests
  • Chain of Title
  • Prior subdividing
  • Future ability to re-subdivide
  • Tax Certificate (taxing entities)
  • Title Insurance Endorsements
  • Financeability
  • Insurability

 

Offers should always be made contingent on full vetting with the aide of professional resources in the process, including Title search, a boundary survey, builder partners, and the like.

Home building is a unique process. Buyers deserve the support that is garnered through the experience of a dedicated Buyer's Agent. If you are in the market for new home construction in the DFW Metroplex or surrounding areas, our team would love to help make your experience pleasant and stress-free before, during, and after your transaction!

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Texas Tarrant County Fort Worth
Tags:
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Rainmaker
825,998
Bruce Walter
Keller Williams Realty Lafayette/West Lafayette, Indiana - West Lafayette, IN

Amanda, there is a builder in our greater area whose website stated another school system in what could be viewed in a misleading manner on their website and when the homes were marketed in the MLS many of the MLS sheets had the incorrect school system.  Accident or on purpose?  Hmmm. . . . . .

Of of our schools systems has closed two elementary schools back in 2007 and 2008.   I did a search and there are 19 MLS listings that are current, pending, sold, or expired within the last year for these two elementary schools that have been closed for six and seven years, respectively!  Some agents just copy the previous MLS sheet when it was last listed for sale no matter what it says!  Inexcusible!

Amanda, it ultimately gets down to the consumer having to be responsible as school districts have websites with school boundaries for their schools that the buyer should have checked on! 

Certainly, buyer representation can protect the buyer in many areas and anyone looking at new constuction in the Dallas Metroplex area needs to call Amanda Thomas for professional representation!

Sep 16, 2014 06:19 AM #1
Rainmaker
729,113
Wayne Johnson
Coldwell Banker D'Ann Harper REALTORS® - San Antonio, TX
San Antonio REALTOR, San Antonio Homes For Sale

Amanda Thomas that is a great list of things to know before buying a lot or in a new home community.

Oct 26, 2014 10:00 AM #2
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Rainmaker
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Amanda Thomas

​Broker, SRES®, BPOR, MCNE, ​Certified DRS Agent™
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