That's a question for your real estate attorney. However since you agreed to the cancellation and accepted the money..........................

The best option is to look forward, and find an architect, beyond the mass chain home builders. You have expectations outside that of a tract home build experience.

As far as the rest, sad to say, they can pretty much do whatever they want since the contract was breached before it was ever formally defunct. They have a team of lawyers on hand to write their contracts. How many $300 an hour attorneys do you have on retainer? How many $300 hours would you be willing to pay for in hopes that your bill wasn’t higher than the dollar figure they retained? 30-40 hours is a paperwork start to a suit, not an end.

Focus on what You learned from this, and finding an architect who can match your vision.

Personally I would probably contact a local lawyer specializing in construction and real estate. Pay for a consult to get their opinion. Depending on what they say, possibly consider having them right a strongly worded letter laying out the facts and the builder's bad behavior and demanding your full deposit back. If they say no I wouldn't invest any more in fighting it, but sometimes a letter from a lawyer is enough to make the other side decide it's not worth the potential legal fight, especially if they're at least partially in the wrong.

How much money are we talking about?

How do you know these details about the other contract? Is it reliable info? Or is it just hearsay through several people and the information could be warped?

Since you knew you wanted out of the contract, and you knew you weren't going to build with them, I wouldn't waste the energy being upset by what they did. Be glad you avoided the bad experience going forward, and unless you have the money for an attorney, I'd just move on.

How did you find out that they sold the contract while you were in contract already? Is it possible they were making contingency plans and didn't actually have anything signed until you officially cancelled?

Yeah - at this point the law won't help you - but ..... the local TV troubleshooter might. Sadly, potential public shaming often works. Shady, shad, shady. Probably not illegal. But - if they already found someone else, they SHOULD have refunded all your money.

(and you SHOULD have engaged with a RE / construction attorney prior to accepting their settlement.)

You cut your losses really early. Well done. Now learn and move on.

If they still have a fair amount of your money it is worth consulting an attorney. Depending on the facts, documentation and jurisdiction, there are several legal arguments that can possibly be made to get all your money back.

I have no legal training whatsoever, but you got a spankin'. Move on please. An attorney would love to help you dig your hole deeper, believe me.

Don't waste your time any further. You suffered no damages from the contract that was signed. You also don't know if that contract was contingent on the release of your own contract.

Yes, you can, and probably should, write a written demand for the return of your deposit in full, along with your reasoning and informing them that you will pursue the matter to the fullest extent as you feel it is your duty to fully expose their deceptive business practices.

You are not trying to win a legal case, you are only trying to convince them that it would be cheaper or better to pay you off.

If you can get the letter to the right people, what you are saying is true, and you can convince those people that you are willing to pursue it, then you may be in luck. You might also try contacting your state's Attorney General's office and file a complaint with their consumer protection division. It has worked well for me.

It is very unlikely that you are going to get good results, so unless it was a ridiculous amount of money keep your investment to a bit of time only.

ETA: I read this as they were actively building the house for someone else as you were still trying to make it work, that is why the mistakes existed. If they found a new client after you notified them but before you actually fully terminated the contract then you are out of luck, you have no damages.

@HU-273850131 - "We've also made the earnest money deposit. ... We requested to be released from the contract, and the builder was willing to do so but wanted to KEEP out earnest money deposit. We were able to get back a portion of the deposit, but they still kept back a good amount!"

You were buying a tract home from a builder that allows certain modifications to their standard designs. You paid an earnest money deposit. My husband and I have purchased three such homes, and put down an earnest money deposit each time. But, as I recall, our purchase agreements all included some sort of statement that should we decide to cancel, we would forfeit that earnest money deposit. Did your purchase agreement contain similar language? Also, for each of our three purchases, our earnest money deposit was $1,000 - that's all that was required.

"Here's the kicker. We just found out that the builder signed another sale contract with different buyers BEFORE they officially cancelled our contract to purchase the same construction home. We also found out the builder made design changes to accommodate the new buyers of what was still going to be OUR FUTURE HOME, while we were STILL UNDER CONTRACT to purchase the home. We are beyond upset because not only did not keep back a portion of our deposit, but they literally sold the house to another buyer BEFORE cancelling our contract. Is this LEGAL!? Can they do that? Can they sign a contract with another buyer to purchase the same house while we are still under contract to purchase it? And since they did this, can we go back to them to request the full earnest money refunded to us? What options do we have? Thank you!!"

I think the key words here are "BEFORE they officially cancelled our contract" -- actually THE key word is "officially." Did the builder enter into the new sales contract AFTER you notified them that you were canceling, but before they "officially" gave you any paperwork of the cancellation? Did you notify them orally, or in writing? I would think that if you notified the builder in writing that you were opting out of the purchase, that freed up the builder to sell to someone else.

But I'm curious as to how much you paid as an earnest money deposit.

Thank you everyone for your input.

Lindsey_CA, I think you gave the best advise in your last paragraph, THANK YOU. The builder required a $20,000 deposit since it was a to-be-built home.

bry911, the builder's mistakes/oversight in build was done before we requested to cancel (so while no other buyer was in the picture - I would hope). Hence why we requested to cancel.

To everyone else saying "no damages" - how can you say no damages if we lost money, especially since the builder did not build the house as contract dictated?

Joseph Corlett, LLC, ain't that the truth!

just_janni, we are definitely going that route at the least, thank you

Now it sounds like they already knew you were going to cancel the contract before they found a new buyer? It just wasn't 'officially' cancelled?

Then I don't really see anything shady about that part. I'd forget about that.

As far as the rest, you agreed to the partial refund and signed off on it. I think the situation is done.

If you'd come to this forum BEFORE you agreed to the partial refund, then I might have a different opinion about how you should proceed.

I’d love to tell the new owners how shady this builder is personally.

"I’d love to tell the new owners how shady this builder is personally."

The builder isn't "shady" if the OP gave notice they were opting out of the purchase prior to the builder selling to the new buyer, which is what happened.

Whether the OP gave notice or not, seems unethical to contract (signed) with another buyer before cancelling the original contract. Like they were hedging. Don’t know the legality of it, but I don’t care for that sort of business practice. Probably better for the OP that the deal fell through. The problem with earnest money is, it’s mostly out of the buyer’s hands, figuratively and non-figuratively.

Whether the OP gave notice or not, seems unethical to contract (signed) with another buyer before cancelling the original contract.

Suppose you hire a caterer for a big event, such as a wedding, he informs you a few weeks before the date that he will not be able to cater your event as he is being detained in another country. When is it ethical to look for a replacement?

"Whether the OP gave notice or not, seems unethical to contract (signed) with another buyer before cancelling the original contract. Like they were hedging. Don’t know the legality of it, but I don’t care for that sort of business practice."

Laws can vary from state to state, but in the state in which I live, an oral agreement is legally binding, as long as it can be proven. This is certainly easy enough for the builder to prove, since the buyer has posted to a public, world-wide forum that they opted out of the purchase. And, for what it's worth, I don't think the OP only gave an oral notification to the builder that they were opting out of the purchase. (See my original response in this thread, along with the OP's response to what I wrote.) So if the OP gave a written notification to the builder that they wanted out of the purchase contract, the builder was then free to sell to someone else, whether or not the builder had yet sent the OP a piece of paper with CANCELED stamped on it in red ink.

"To everyone else saying "no damages" - how can you say no damages if we lost money, especially since the builder did not build the house as contract dictated? "

Again, your damages did not arise from the builder signing a new contract with another buyer.

You already accepted a settlement for the builder's mistake and that matter is done.

Laws can vary from state to state, but in the state in which I live, an oral agreement is legally binding, as long as it can be proven.

The statute of frauds applies to real estate contracts and therefore must be in writing. There are various ways around the statute of frauds, but let's not get into that.

Again, there is nothing for the builder to prove, as there are no additional damages, this is a breach of contract that happened prior to the settlement, and that settlement is for the breach of contract. The buyer can argue that it was the builder that actually breached the contract, while the builder can argue that it was the buyer who actually breached the contract, but once a settlement is reached between the two parties that is pretty much the end. Any damages related to the breach were settled when the OP agreed to a partial deposit return.

Aside from that there is a principle called anticipatory breach. If one party indicates that they will not honor a contract, the other party can breach in anticipation of that future breach. This idea is good for both parties as it limits damages. A word of caution: anticipatory breach has some rather strong conditions so you shouldn't run around breaking contracts and citing anticipatory breach, that is a good way to get yourself in trouble.

----

I try to advocate for the OP, probably more than I should, but this time, the OP is tilting at windmills. I understand the frustration about the unfairness and even sympathize, but the only way to make a little money out of fighting injustice is to start with a whole lot of money.

builder's mistakes/oversight in build was done before we requested to cancel (so while no other buyer was in the picture - I would hope). Hence why we requested to cancel.

If the builder made this mistake BEFORE the other buyer entered the picture, then the mistake was not made to get rid of you as a buyer. The builder has every right to try finding a new buyer once you have indicated you may be canceling the contract (they also have other homes available for the other buyer I assume).

The mistake was made on your part for signing of on a partial release of Deposit. For $10,000 that they kept, I would not have been so willing to sign off. But, their contract also probably covers them for “slight foundational errors” even if these slight errors seem major to you. Where you go now is up to you...and whether an attorney would take the case. They would likely just try writing a letter to the builder requesting the remaining deposit back and the eating a lawsuit if not. I wonder though exactly how much the actual measurements differed from the original plan?

Lindsay- There is not a US State that Real Estate contracts can be verbally changed. Real Estate required a written contract to be signed and a signed form to release that contract.

The big mistake was mistaking a tract builder for a custom builder. Everything after was a game of self deception and failure to comprehend the written things signed.

"Lindsay- There is not a US State that Real Estate contracts can be verbally changed. Real Estate required a written contract to be signed and a signed form to release that contract."

B Carrey - OK, I agree. But it is patently obvious that the OP gave the builder written notice that they were opting out of the purchase contract, so that's a moot issue.

And, yes, I know I spelled your name incorrectly. I afforded you the same respect you showed me.

(signed) Lindsey

Oh, Lindsey you hurt my feelings. Except, I am use to having my name spelled wrong. If I had copy and pasted rather than scrolled down my phone, obviously it would have showed the CA in your name too. My point was not to misspell your name but to point out your inaccurate information. OP needs to understand that nothing in Real Estate matters until it is signed. It makes a difference.

What matters in this instance is how far off the original plan that the OP signed off on was from the actual plan. And did the contract allow for that. Since builders purchase contracts tend to protect the builder, courts do not look as fondly on one sided contracts. The new buyer has no bearing on this situation since the build error was made prior to that buyer entering into a contract. The builder finding a new buyer does not mean the OP gets the full deposit back. However, if the plan was for 2,000 square feet and the final was 1,500 square feet, I would imagine the OP would have an easy time getting the remaining deposit back, even though they signed off already.

if the plan was for 2,000 square feet and the final was 1,500 square feet, I would imagine the OP would have an easy time getting the remaining deposit back, even though they signed off already.

I respectfully disagree. It is exceedingly unlikely that the OP could overcome the settlement and even more unlikely that it would make financial sense to try.

We should understand that in most states you risk more than your deposit when you breach a contract. The deposit is given as reasonable insurance you will not breach, but it is rare that any contract maker will limit their recourse to surrender of deposited funds. The builder could sue for specific performance, in other words he could make you buy it. He might also sue for losses associated with your breach. When you agree to a partial refund, you are agreeing that you will not sue him for problems during construction and he will not sue you for further damages or specific performance. A settlement is essentially a new contract.

The only way the OP would reasonably get around that, and still probably not cheaply, is if he could prove that the builder regularly did this as a profit generator. I once saw a landlord, who had low rent rates on a great property, get in trouble for taking excessive applications, and associated fees, for each apartment he rented. Whenever he needed money he would just accept applications even if he didn't have a vacancy, at $75 per application he was making a mint off of them and he would just put people on a waiting list, sometimes for years. He lost a case and ended up having to sell the complex.