Duped by Developer or Deficient in Due Diligence?

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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