A Verbal Contract to Build a Home Should be Enforceable
Question: We want to build a home on a lot we own in north Scottsdale. After interviewing several homebuilders, we found a homebuilder that we liked. The reason that we liked this homebuilder was that we had looked at a specific home a mile away that the homebuilder had built which was the same type of home that we want to have built. The homebuilder showed us the plans and specifications for this home. We had several more meetings with this homebuilder, and our handwritten notes show that we agreed on everything for a price of $516,000. We even shook hands! The next week the homebuilder said that, due to the increased cost of building materials, he would have to charge us $552,000 to build our home. When we said that we would sue for the $516,000 price that the homebuilder had quoted us, the homebuilder said that we had nothing in writing with him. Did we waste all of our time dealing with this homebuilder because we don’t have a written contract signed by the homebuilder?
Answer: You should still be entitled to enforce the verbal agreement for the $516,000 purchase price. Although a contract for the purchase of any real property generally must be in writing, you already owned the real property, i.e., you owned your lot of land. In other words, you were simply contracting with the homebuilder to build a home, i.e., a contract for personal services, similar to hiring a contractor to build a block fence in your backyard. Therefore, if you and the homebuilder have verbally agreed on all of the elements of the contract to build your home, e.g., purchase price and completion date, you should have an enforceable verbal contract.