Could a builder be liable if mortgage rates go up before a house is complete?
Question: Last year, under a Jan. 15 contract with our homebuilder for the construction of a new home in Maricopa County, we had a closing date of Oct. 15. A month later, the homebuilder's sales agent emailed us that the house should be completed by Sept. 1. In reliance on her email, we "locked in" an interest rate for Sept. 1. The homebuilder, however, failed to complete our new home until the scheduled closing date of Oct. 15. Due to this delay, we lost thousands of dollars because of a higher interest rate. Do we have a claim against the homebuilder based on their sales agent's email?
Answer: Probably not. Any contract and any amendment to a contract require what the law calls "consideration," which generally means an agreement by one party to do something in exchange for another party doing something (e.g., one party delivers a pen in exchange for payment of $5). There was probably no consideration from you to the homebuilder for an earlier completion date of Sept. 1. Therefore, your homebuilder should not be liable to you for your higher loan costs.
Under the law of detrimental reliance, however, you may have had a claim against the homebuilder if you had emailed back the sales agent and said that you were going to "lock in" a Sept. 1 interest rate based on her email.