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Another Reason NOT to Buy a New Build

By Peter Olson, Esq.

There are many reasons NOT to buy a new-build home whether condo, townhome, or single family home...unknown property tax liability (no credit at closing), very limited warranty protection from developer, well-protected Seller (from liability that is), house settling (i.e. smallish repairs), and under-funded associations. At various home buying speaking engagements I'll often share my opinion that a new-build condo is the WORST type of home to buy. Because of all the above reasons with the under-funded association issue underlined. When you read of the $20k special assessment horror stories it's nearly always a new-build condo where the developer sold everything off quick, it was crappy, and the association was hardly funded.

Just to add another log to the fire, I see Kimball Hill filed for Chapter 11 protection last week following many other local builders, including Neumann Homes. ANOTHER REASON not to buy a new-build. If your Seller/Developer files bankruptcy while you're under contract with them to build a home, get ready for a lot of delays and possibly a quick refresher on the US Bankruptcy Code so you can get your earnest money back.

Full post as published by Closing Real Estate in Chicago on April 26, 2008 (boomark / email).