Reading the Fine Print: 7 Builder Contract Clauses to Understand Before You Sign

I've sat at a lot of closing tables, and I can tell you the buyers who feel great at the end of a new-construction build are almost never the ones who got lucky. They're the ones who understood what they signed on day one.

Here's the thing about builder contracts: they are not the standard Kansas purchase agreement your agent uses on a resale home. Every builder — and we have wonderful ones working across Johnson County right now — writes their own contract, and that contract was written by the builder's attorney to protect the builder. That's not sinister. It's just the starting point. And it means the fine print deserves your full attention before you sign, not after the framing goes up.

So let me walk you through the seven clauses I review most carefully with my buyers, in plain English.

1. The Escalation Clause

Some builder contracts include language that lets the builder pass along cost increases — lumber, concrete, labor — that occur during your build. On a 12-to-18-month timeline, that's real exposure. Some contracts cap it at a percentage, some require documentation, and some are open-ended.

What you want to know: is your price fixed, capped, or floating? If there's an escalation clause, negotiate a cap and a paper trail. If the builder won't budge, at least you're budgeting with your eyes open.

2. Allowances (and What Happens When You Exceed Them)

Your contract price almost always assumes allowance amounts for things like lighting, flooring, countertops, and landscaping. The model home you toured? It usually blew through those allowances long ago.

Ask for the allowance schedule in writing and compare it against the finishes you actually expect to choose. The gap between the allowance number and the design-center reality is the single most common reason buyers end up $50K to $150K over the base price. I wrote more about which of those choices actually pay you back in my guide to builder upgrades that hold their value at resale.

3. Earnest Money and Deposit Structure

Resale deals in our market usually involve modest earnest money. New construction is different — builders often ask for significantly more up front, plus non-refundable design-center deposits once you start making selections.

The questions that matter: How much is refundable, and under what conditions? Does your deposit sit in escrow or go straight into the build? What happens to it if the builder — not you — cancels or can't deliver? Get every answer in the document itself, not in a conversation with the sales office.

4. The Construction Timeline (and the Delay Language)

Nearly every builder contract gives the builder generous flexibility on completion dates — weather, supply chains, labor, permitting. What it rarely gives you is compensation when the date slips. Meanwhile, your rate lock has an expiration date and your current home has its own timeline.

You usually can't force a hard deadline, but you can plan around a realistic one. Ask what the builder's average actual completion time has been in that community over the past year — not the number printed in the brochure — and build your lease-back, rate-lock, and moving plans around that.

5. Change Orders

Once you're under contract, every change has a price and a process. Good contracts spell out how change orders are priced, documented, and approved. Vague ones leave room for the "we talked about it on site" surprise at closing.

My rule with clients is simple: nothing verbal. If you and the superintendent agree to move a wall or add a window, it goes on a signed change order with a number attached, every single time.

6. The Warranty — What's Actually Covered

Most builders in our area offer something like a 1-2-10 structure: one year on workmanship, two on systems, ten on major structural. The details vary a lot, though — who administers the warranty, how claims get filed, and what counts as "structural." Third-party-backed warranties survive even if a builder winds down; self-administered ones are only as strong as the company behind them.

Read the warranty booklet before you sign the contract, because it's part of the deal you're agreeing to. And remember the warranty is separate from your walkthrough rights — my final walkthrough punch list covers what to catch before you ever get the keys.

7. Representation — Whose Agent Is in the Room

The friendly person in the sales office works for the builder. Again, not a criticism — it's just the structure. But the contract you're handed will reflect it, and in most Johnson County communities the builder pays your agent's fee, so bringing your own representation typically costs you nothing.

I've walked buyers through builder agreements in communities all over the county, from Sundance Ridge to Mission Ranch, and there has not been one where we didn't find at least a question worth asking before signing. Sometimes the answer is fine. But you want to ask it on day one, when everything is negotiable — not at month eleven, when nothing is. Here's more on why representation matters on a new build.

Before You Sign Anything

A builder contract isn't something to fear. Thousands of families in Johnson County sign them every year and end up in homes they love. But the buyers who protect themselves best do three things: they read the whole document, they get every promise in writing, and they bring someone to the table whose job is to represent them.

If you're looking at a new build anywhere in the county and you'd like a second set of eyes on the agreement before you sign — that's exactly what I do. Reach out and I'll walk through it with you, clause by clause, no pressure and no jargon.