Exclude Oral Representations

Oral Representations Often Lead to Disagreements

Now that Daylight Saving Time has arrived and spring is two weeks away, many customers are ready to start building their home.  Other customers are getting ready to select their modular builder.  With interest rates predicted to rise by June and housing starts to increase to their highest level in several years, getting started soon is a wise move.  Here is some advice about ensuring that your modular home contract includes what you expect.

Experienced modular builders have lots of stories to tell about the types of problems that cause disagreements with their homebuyers.  One type of problem involves misunderstandings about items that were never discussed or documented because one party just assumed what the other party intended.  Another type of problem involves misunderstandings about things that were discussed but not included in the builder’s contract.  It might surprise you that more frustration, anger, and stress are generated by issues that were actually discussed – but not documented in writing – than by those that were not discussed.

These situations typically involve complaints by the homebuyers such as, “I told you I wanted raised panel maple kitchen cabinets and not picture frame maple cabinets.”  The builder might come back with, “Don’t you remember, we did talk about your preference for raised panel maple cabinets, but the additional cost put you over your budget.”  The problem is that the modular builder and homebuyers had talked about this on two occasions, going back and forth about which would be included, but the final contract just said “maple kitchen cabinets” and now both parties remember the discussion differently.

The Cost of Relying on Oral Representations

The cost difference between the picture frame and raised panel maple cabinets would be substantial enough on its own.  But usually this misunderstanding doesn’t get discovered until the cabinets are already purchased and at least partially installed.  It will cost either the homebuyer or builder (or both) a bit of money to make the change.  The alternative is no better.  If the homebuyers accept the picture frame cabinets, they will likely be unhappy with their modular builder and forever disappointed in their kitchen.  The relationship between the two parties will now be fractured by distrust, which will make it more likely that small disagreements will become antagonistic.

Agree to Make Oral Representations Null and Void

The last thing you want to do is to rely on your modular builder’s or your own memory of what you’re getting.  That’s why it is better for modular builders to include a clause in their contract that states that “It is mutually agreed that any oral representation made by either party prior to the signing of this agreement is null and void.”  This clause serves to limit and place boundaries around the scope of either party’s representations and warranties.   Even if an item is discussed and agreed to verbally, it has no legal validity unless it’s documented in the contract.

Replace Oral Representations with Detailed Written Representations

My suggestion is that you share responsibility with your modular builder for documenting all the details by taking notes during your meetings.  You should be concerned if your builder is not also taking notes.  If you then compare your notes with the builder’s contract, you are more likely to avoid contentious and costly disagreements.

For more information about oral representations in your contract with your modular home builder, see Selecting a Modular Home Dealer and Selecting a General Contractor in in my book The Modular Home.