Builder Contracts in Colorado: 9 Things to Check Before You Sign

If you're buying a new build in Northern Colorado, there's one document that matters more than the floor plan, more than the lot, and more than the upgrades. The purchase contract.

And here's what most buyers don't know. It's not the same contract people use to buy a resale home. It's the builder's contract. Written by the builder's attorneys. To protect the builder.

I'm Mark Leavitt with NoCo New Builds and RE/MAX Alliance. In this video, I'll walk you through what's usually inside a builder contract, the sections that catch buyers off guard, and what to do before you sign.

Quick note. I'm not an attorney, and this isn't legal advice. Every builder's contract is different. If you have a legal question, talk to a Colorado real estate attorney.

Let's start with why this contract is different. When you buy a resale home in Colorado, brokers use a standard contract approved by the Colorado Real Estate Commission. Both sides know it. It's been reviewed and revised for years. And it's built to be fair to both the buyer and the seller.

New construction is different. The state's standard contract is designed for homes that already exist. A home that isn't built yet doesn't fit it. So builders use their own purchase agreement, drafted by their own attorneys.

That's not a scandal. It's normal. But think about who wrote it. The builder's attorneys wrote every line with one client in mind. And it isn't you. That's also why the builder's sales agent can't really help you here. They're friendly. They know the product. But the builder's agent works for the builder.

First. Earnest money and deposits. With a resale home, your earnest money usually stays refundable while you work through inspections, the appraisal and your loan. Builder contracts often work differently. The deposit can be larger. And it may become non-refundable much sooner than you expect.

Then there are design deposits. When you pick upgrades at the design center, many builders ask you to pay for some or all of them up front. Because those finishes are chosen just for you, that money is often non-refundable. So before you sign, find out exactly how much you're putting down, when it goes hard, and what happens to it if your loan falls through.

Second. The completion date. The date the sales office gives you is usually an estimate. Not a promise. Most builder contracts give the builder room to push the date back. Weather. Supply delays. Labor. City inspections. And in many contracts, you can't cancel because the house is late.

Your whole life is planned around that date. Your lease. The sale of your current home. Your rate lock. If the home runs three months late, a rate lock can expire, and extending it can cost real money. So ask how the completion date is defined, how far the builder can push it, and what your options are if it slips.

Third. Price, lot premiums and changes. Your price is usually more than the base price. There's the lot premium. The structural options. The design center upgrades. Make sure every one of those numbers is written into the contract or an addendum. And look for the change-order rules. After a certain point, many builders won't allow changes at all, or they charge a fee for each one.

Fourth. The builder's right to substitute materials. Most builder contracts let the builder swap materials or products, as long as the replacement is similar or equal in quality. Usually that's harmless. But if a specific finish really matters to you, ask how substitutions work, and get that item described clearly in writing.

Fifth. Financing and the appraisal. Some builder contracts give you a short window to get loan approval. Some say what happens if you don't qualify, or if the home appraises for less than the contract price. If the appraisal comes in low, you might have to cover the gap in cash. And this is where the lender incentive shows up. Many builders offer closing cost help or a rate buydown, but only if you use their preferred lender. That can be a good deal. It can also come with conditions.

Sixth. The warranty, and what you give up. Most builders include a written limited warranty. Often one year on workmanship, two years on systems, and ten years on major structural parts. Many builder contracts say that the written warranty is the only warranty you get, and they may ask you to give up other rights you'd otherwise have. So read the warranty document itself, not just the summary.

Seventh. Disputes. Many builder contracts require mediation or binding arbitration instead of going to court. Some limit what you can recover. Some set short deadlines. Colorado also has a construction defect law with its own notice process before a lawsuit. If you ever have a serious issue, talk to an attorney early.

Eighth. Inspections and access. You should always get your own independent inspection on a new build, before the drywall goes up and again before closing. But check the contract first. Some builders limit when an inspector can come on site, or require proof of insurance.

Ninth. Agent registration. Many builders require your own agent to be with you, or registered, on your very first visit to the community. If you walk in alone first, some builders won't let you add an agent later. So before you tour, call your agent.

So what do you actually do with all this? One. Ask for a copy of the full contract and every addendum before you're ready to sign. Two. Read it with someone who works for you: your own agent, and for anything legal, a Colorado real estate attorney. Three. Get every promise in writing. Four. Ask what's negotiable. And five. Keep copies of everything you sign.

The builder's contract isn't your enemy. Builders need protection too. But it was written for them. You deserve someone reading it for you. In most cases, the builder pays my fee, and we'll confirm that in writing before you commit.

I'm Mark Leavitt with NoCo New Builds and RE/MAX Alliance. The builder's agent works for the builder. I work for you.