You’ve heard it here frequently: Building materials cost more now than they have ever before.  It’s hitting home builders on all price points, from entry-level markets to higher-end custom homes. But what happens when the cost for materials blows the sales price on the contract out of the water? How much (or little) should a builder do about it?  According to Phil Crone of the Dallas Builders Association, lumber prices have increased by more than 180 percent since last spring, increasing the price of an average new single-family home by more than $24,000.

The execution of “no cause” clauses is becoming more and more common, according to real estate attorney Rachel Khirallah.  These clauses in builder contracts are not new. Builders are just exercising them more now than ever before.  Khirallah said the clauses protect builders from the fluctuating price of materials as well as allows them to cash in on a hot housing market.  “They are using these clauses because they’re realizing that they can get a better deal out there,” Khirallah said.  Khirallah recommends new home buyers to have a lawyer look over a contract but adds, especially with the currently housing demand, most builders will not enter a contract without a cancellation clause.

• Dallas Business Journal, July 16, 2021