Commingle$ & Completion date in Purchase Agreement for New Construction Single Fam

[Shawn W.]

Hi BP community! 

New investor myself and trying to help my parents makes sense of their Purchase Agreement on a New construction single family house in Florida.

Are these two terms below in the Purchase Agreement common? 

1.  'XXX Inc.' has the right to commingle purchaser's fund in their general operating account. 

2. The purchase agreements contains no completion date. XXX inc. agrees to use it's best effort to deliver the house on or about 180 days from the date of actual commencement (slab pour)...However XXX inc will not be responsible for any inconveniences caused to the purchaser for failure to complete the house by said number of days... (not word my word here but that's the gist of it, no mentioning of any penalty of delay) 

This Purchase agreement is signed long time ago, but the house is still under construction. My parents are buying remotely so they are worried. Thought I'd finally do my first BP post here to ask the question (after being listener of BP podcast for a long time!) 

Thank you all for any thoughts or advice! 

Shawn

[Lateefah Mathews]

Hey Shawn, 

Welcome to the BP community! I work with many Purchase and Sale agreements, and there are indeed some concerns with this contractor agreement. 

#1. It's not a common practice for any real estate transaction to allow for commingling a purchaser's funds in their general operating account. Generally, funds are held in an escrow account, a separate account designated for that purpose. 

#2. In a standard purchase and sale agreement there is usually a "specified completion date" for the construction. The absence of a completion date with no true timeline is concerning. Also, the lack of penalties for delays raises a red flag. 

These clauses deviate from common RE practices and I would advise further scrutiny by a Real Estate Attorney to safeguard your parent's interest.