This Texas family overcame hardship to buy a new home, but builder rips up the contract

After losing their home because of financial problems years ago, Gabriela Lopez and her husband worked hard to rebuild their credit, save money and buy a dream home.

The couple, who have five children and live in a two-bedroom home in the Runaway Bay area about 60 miles northwest of Fort Worth, finally prequalified for a loan. They signed a construction contract in January for a 1,947-square-foot, four-bedroom home to be built in the Wise County community of Boyd, closer to the Dallas-Fort Worth urbanized area.

Construction was slow, but everything seemed to be going OK until June 28, when the builder, Doug Parr Custom Homes, abruptly canceled the contract.

“It feels like they ripped the rug out from under our feet,” said Lopez, a long-time Wise County resident who works as a receptionist and assistant at a Southlake medical office. Her husband, Jose Juan Lopez, works at a rock-crushing operation in Wise County.

Officials from Doug Parr Custom Homes did not respond to messages left with a call taker at the company’s office in Boyd, as well as emails to the company and to Clinten Bailey, Doug Parr director of operations.

Rising construction costs drive trend

This setback for the Lopez family is the latest example of a trend in which North Texans sign contracts with new home builders, only to have the contracts ripped up while the house is under construction. In Lopez’s case and many other instances, the builders cite the rising cost of construction materials such as lumber.

“I’ve been doing this 20 years. I’ve never seen this,” Rick Shelhorse, branch manager of Synergy One Lending in Plano, said in an interview. He said his office has three clients, including the Lopez family, who have been told by a builder they will have to pay thousands of dollars more if they want to keep their home.

In Lopez’s case, she was notified June 25 that the price of her $320,000 home would be raised to about $384,400, and she could either pay the additional money or walk away from her contract. Three days later, before she had notified the builder of her decision, Lopez received a letter notifying her that it was no longer her decision, and the contract had been canceled by the builder.

“I think they’re just taking advantage of the market, and they can do that to people because they know somebody is going to pay it,” Shelhorse said.

In the June 28 letter, Bailey, the director of operations for Doug Parr, wrote to Lopez that the contract was being canceled because “it is clear that certain disputes and/or material misunderstandings between the parties have arisen concerning the Contract, including but not limited to, the escalation of material costs.”

But Lopez and her real estate agent, Ryan Barnes, said there were no such disputes or misunderstandings. Lopez said that when she spoke by phone with company owner Doug Parr on June 25, she expressed concern about whether she would still qualify for a loan that was nearly $65,000 higher than her original loan, but she never said yes or no to the higher price.

Barnes, who works with the Cassie Samons Team and JP & Associates in Justin, said he repeatedly asked the builder for evidence of the price increases, including the dates in which the builder purchased the materials, but was refused. He said he visited the builder’s office in person June 30, but was told to leave.

Lopez, who also holds a second job as a caregiver for an elderly client, said she isn’t sure what to do next. The family can stay at their home in the Runaway Bay area, but it is cramped for such a large family.

She said her children, who had been excited to move into their new, spacious bedrooms, are hurt and confused by the loss of the home.

Experts: Have lawyer review contracts

Prospective home buyers should read their contracts with builders carefully to make sure they are aware of any language that may make it possible for the builder to raise the sales price, several real estate finance and legal experts said. In new home construction, contracts are often drawn up with language that favors the builder — for example, making it difficult for the buyer to cancel the deal, but relatively easy for the seller.

It’s worth spending a few hundred dollars to have a lawyer look over the contract before signing, the experts said.

And, Lopez was even more frustrated to find out that another Doug Parr Custom Homes buyer on the same street is not being asked to pay higher prices because of construction costs. She knows this because her lender, Synergy Lending, also represents the other buyer.

“I assumed they were raising all the prices at the same time,” she said. “Why us?”

“I still don’t understand how you can sign a contract and not mean it,” she said.