Understanding the Billing Contract

The contract for the purchase of a new home includes a collection of documents. These may include the purchase agreement itself, blueprints, specifications, option and color selection sheets, lighting schedule, site drawing, and limited warranty.


Price and Allowances

The total cost of your home is stated in the contract. The cost is subject to change based upon your change orders and selections. You may be ready to get the building process moving but still need more time to finalize choices for items like carpet, cabinets, tile, appliances, and light fixtures. An allowance is included in the contract. If the actual cost of the items exceed the allowance, you pay the difference in cash.


Commence and Complete Construction

Understandably, you are anxious for the builder to start your home. However, several preliminary tasks usually need to be completed before the builder begins construction. You will need an approved loan, and the builder needs to obtain a permit, which can take from a few days to weeks. Skilled labor shortages, weather, and change orders can extend the construction schedule.


Change Orders

Most buyers try to limit the change orders because they delay the schedule and add to the cost.


Conformance With Plans and Specifications

This clause allows the builder to make changes required by code revisions, site conditions, or other events outside the control of the builder. If a supplier goes out of business or a manufacturer updates models, the builder has no choice but to alter the intended home accordingly. “The builder has the right to substitute materials or equipment of equal or better value” appears in most new home contracts. Similarly, since a home is handcrafted by human beings, exact reproduction is unlikely. Measurements will vary slightly from any model or plans. The exact placement of switches, outlets, and vents change.


Plan Ownership

The builder typically owns the plan from which the house is built, even if you are allowed to make some custom changes. Sometimes the builder will grant limited permission to use them, but at a significant cost since house plans are intellectual property.


Site Visits

Site visits are restricted due to increased safety regulations and insurance liability. Scheduled tours are provided at specified stages of construction.



The builder’s routine inspections identify items that need attention. Your input should be given to the builder, not the people working on the site. They have no authority to change anything, and confusion can easily result.


Inspection and Acceptance

Shortly before closing, you will review your home to confirm that it includes all the items you ordered and that the builder met the promised standards.

The contract is enforce only when all named parties have signed it. The meeting to go over all the paperwork and sign everything can take a few hours. Read everything before signing it. This paperwork is the official beginning of building your new home.