What's in a Builder's Purchase Agreement? | Realtor Cas
What's Actually in a Builder's Purchase Agreement? (Key Clauses to Read Twice)
A builder's contract runs longer, is written entirely by their attorneys, and matters more than a resale agreement, because you usually can't inspect the home before you sign.
What's in a builder's purchase agreement? Terms written entirely by the builder's own attorneys, which is why reading it closely matters more here than on a resale purchase. The clauses worth reading twice: completion date language (often flexible in the builder's favor), design center change-order deadlines, the financing contingency window and its tie to earnest money forfeiture, narrowed inspection rights, warranty and limitations-period language, arbitration clauses, and the builder's representations about workmanship. In 2022, the Washington Supreme Court struck down a one-year contractual limitations clause as unconscionable in Tadych v. Noble Ridge Construction, holding that Washington's six-year statute of limitations for construction claims controls instead, a good example of exactly the kind of clause worth scrutinizing before you sign.
Most buyers glance at the purchase price, the estimated completion date, and the signature line, and skip the 30 to 60 pages in between. That's understandable, and it's also exactly how buyers end up surprised by a clause they never knew existed.
This walks through the specific clause categories worth reading twice, in plain language, and ties each one back to the deeper coverage already on this site. If you haven't read them yet, can I back out of a new construction contract and earnest money on new construction both go deeper into two of the categories covered here.
Why Are New Construction Contracts Different From a Resale Purchase Agreement?
One key reason: you usually can't inspect the home yet
A resale purchase agreement is typically a standard form both sides' agents have used hundreds of times. A builder's purchase agreement is drafted entirely by the builder's own attorneys, written to protect the builder, and often runs 30, 40, sometimes 60-plus pages.
The bigger structural difference: on a resale home, you can usually walk through and inspect it before you ever sign a contract. On new construction, the home frequently doesn't exist yet, or exists only as a foundation, at the point you're signing. That's exactly why the contract's language about the builder's representations, warranty terms, and your inspection rights carries more weight here than it would on a resale deal where you've already seen the actual house.
What Does the Completion Date Clause Actually Say?
Often more flexible than it sounds, in the builder's favor
Many builder contracts give the builder wide latitude to push your closing date back, sometimes with language like "estimated" completion date and broad allowances for weather, material delays, or permitting, without much recourse for you. That's a very different standard than the firm dates typical in a resale contract.
Ask specifically: is there any outside date after which you can cancel without penalty if the home still isn't complete? Some contracts include one; many don't, or set it further out than buyers expect. If you're on a lease with a hard move-out date, or juggling a contingent sale on your current home, this clause deserves more attention than it usually gets.
What Are Design Center Change-Order Terms, and Why Do They Matter?
Deadlines and pricing that lock in before you've seen the finished product
Design center clauses set deadlines for finalizing your selections and often lock in pricing the moment you sign off, sometimes with no ability to cancel once materials are ordered. These terms are frequently addenda attached to the main contract rather than sitting in the body of it, which makes them easy to skim past.
What happens if you back out after finalizing design selections is covered in more detail in can I back out of a new construction contract, including how design center deposits are often treated separately from your main earnest money.
What Do the Financing Contingency and Earnest Money Clauses Say?
Two clauses that are really one conversation
New build contracts commonly give buyers a set window, often somewhere in the 30 to 45 day range, to secure financing before that contingency expires. Read closely for what penalty attaches if your loan falls through after that window closes: many builder contracts allow the builder to keep some or all of your earnest money if financing fails later in the process, even if you acted in good faith.
Earnest money on new construction covers exactly how much builders typically require, how Washington law treats forfeiture, and when a deposit becomes non-refundable, all of which ties directly back to how this specific clause is worded in your contract.
What Are Your Actual Inspection Rights in a Builder Contract?
Narrower than what you'd have on a resale purchase
Because the home often isn't built yet when you sign, your inspection rights on new construction typically look different than on resale, and sometimes narrower. Some contracts require you to get the builder's permission before bringing in a third-party inspector, or limit how many inspection points you get throughout the build. A punch list clause, requiring the builder to complete a documented list of items before or shortly after closing, is worth confirming is actually in the contract rather than assumed.
Is an inspection necessary on new construction covers why an independent inspection still matters on a brand-new home, and what to ask for at each build phase.
What Does the Warranty and Limitations-Period Clause Say?
A real Washington case worth knowing about
Builder warranty language often includes a clause limiting how long you have to bring a claim after closing, and buyers commonly assume whatever number is printed in the contract is the final word. In Washington, it isn't necessarily. In Tadych v. Noble Ridge Construction, Inc. (2022), the Washington Supreme Court's own published opinion held that a contract's attempt to shorten a homeowner's claims period to one year was substantively unconscionable, because it stripped away the six-year statute of limitations for construction claims established under RCW 4.16.310.
That doesn't mean every limitations clause in a builder contract is automatically unenforceable, the court's reasoning turned on specific facts about how one-sided and unbargained-for the clause was. But it's a real, recent example of exactly the kind of language worth flagging for review rather than assuming is final. What does the warranty actually cover goes deeper into how Washington's warranty and claims-period rules work.
Is There a Binding Arbitration Clause in Your Contract?
Worth knowing what you're giving up
Many builder contracts include a binding arbitration clause, meaning a dispute must go to a private arbitrator instead of court. Arbitration is often faster and less formal than litigation, but signing a contract with this clause intact generally means waiving your right to sue in court, and arbitration decisions typically can't be appealed the way a court ruling can.
This isn't automatically a bad clause to have in a contract, but it's worth actually knowing it's there and understanding what it means before a dispute ever comes up, not discovering it for the first time in the middle of one.
What Are the Builder's Representations, and Why Do They Matter More Here?
A stand-in for the inspection you can't do yet
Because you typically can't inspect a new construction home at the point you're signing the contract, the builder's written representations, that the home will be built in a good, workmanlike manner, free of liens or encumbrances, and according to the agreed-upon plans, do real work in the meantime. These representations are effectively standing in for the walk-through inspection a resale buyer gets before they ever sign anything.
Confirm these representations are actually written into the contract, not just implied or verbally promised by the sales office. A buyer's agent reviewing the contract before you sign is exactly where this gets caught; do I need a Realtor when buying new construction covers the rest of what representation catches in a builder's deal.
Buying New Construction? Start Here
Frequently Asked Questions
Builder purchase agreements, common questions
What's the difference between a builder's purchase agreement and a resale contract?
Can a builder push back my closing date without penalty?
Can Washington builders shorten my warranty claims period to one year?
What is a binding arbitration clause in a builder contract?
Why do inspection rights matter more on new construction than resale?
About to Sign a Builder's Purchase Agreement?
Let's go through the actual contract together, clause by clause, before you sign, not after something surprises you.
Book Your Free Discovery Session Run the Affordability Calculator Join Our Facebook GroupCategories
Recent Posts
GET MORE INFORMATION
Cassandra Marks
Realtor, Licensed in OR & WA License ID: 201225764
Realtor, Licensed in OR & WA License ID: 201225764