Anti-speculation Clause
In CA, some new home builders are including anti-speculation clauses in with the purchase agreements. These clauses state the Buyer must occupy the home for 18 months. If the Buyer sells before then, the Seller (builder) can keep all of the Buyers appreciation. Also, if the Buyer rents out the home during the 18 months, the Seller (builder) can either keep the rental profits or decide to buy back the home at its original purchase price. Is anyone familiar with this clause and has anyone ever seen this enforced?
it sounds like a variation of what was explained as policy when I bought my home a few years ago.
By dong this, the builder is limiting their competition. They don't want to have to compete with speculators selling the homes they build in their development until they have the development sold out. If I were in their shoes, I would say it's a good idea. Sucks as an investor though.
Jeff
But do the builders actually follow through or is it just a scare tactic? If the Buyer decides to sell and doesn't put up a sign or make it obvious, how will they know? Just curious if they really check up on this or just try to scare off investors from the start.
My understanding of the issue is that when questioned you may be asked to show that hardship is the reason that you are selling prior to the 18 month time limit.
If it is a condition of sale when you purchase the property, part of the contract, and they are having a hard time selling properties themselves, they would be more likely to try to enforce this. If the development is 95% sold out after 3 months, and your house closes after 4, you're likely pretty safe.