Resource Center · Part of our New Construction Guide series for Michigan buyers.

Buyer Education · New Construction

What Should You Know About a Builder Contract
Before You Sign?

Builder contracts in Canton, Novi, Brighton, Lyon Township, and across Southeast Michigan govern deposits, timelines, finishes, inspections, and remedies. This guide explains what is in the package and what to review before you sign.

Hearts to Homes Resource Center · By Derica Wade, Associate Broker · Last reviewed August 2026

A Michigan builder purchase agreement is not the same as a resale contract. Before you sign at the model home desk, understand what the deposit schedule, timeline language, specifications, and warranty sections actually commit you to.

Part of the Hearts to Homes Resource Center · Written by Derica Wade, Associate Broker, Real Estate One · Wayne, Oakland, Washtenaw, and Livingston counties

Jump To

Introduction Vs. Resale Contract Package Key Sections Builder-Favorable Clauses What Is Negotiable Deposits Specifications Inspections Warranty Before Signing Conclusion FAQ Related Resources

Start Here

Why Do Builder Contracts Deserve Their Own Guide?

Most buyers focus on the floor plan, the model kitchen, and the monthly payment. The purchase agreement gets treated like paperwork at the end. On new construction, that order is backward. The contract is the product. Everything else flows from what you sign.

Hearts to Homes REALTOR reviewing a Michigan new construction builder contract with buyers at a consultation table

A Michigan builder purchase agreement is a proprietary contract, not the standard MLS form used in resale. It governs deposits, timelines, specifications, warranties, and remedies. Builder sales consultants explain the brochure version well. The clauses that matter are usually on page 14, in the deposit exhibit, and in the fine print around substantial completion.

If you are building in Wayne, Oakland, Washtenaw, or Livingston counties, you may see different contract packages from national production builders, regional semi-custom builders, and local custom builders. The brand on the sign does not tell you how negotiable the contract is. The document on the desk does.

This guide explains how builder contracts work in plain language, without treating builders as adversaries. Builders build homes. Their contracts are written to standardize how those homes are sold. Your job, with your REALTOR, is to understand what you are agreeing to before the design center and before the deposit checks.

Who this guide is for

Buyers preparing to sign a builder contract anywhere in Southeast Michigan or Metro Detroit. Move-up buyers comparing new build versus resale. Relocation buyers new to Michigan builder documents. And anyone who toured a model home and received a contract package they have not read yet.

Did you know?

Michigan does not require builders to use a standard purchase form. The Michigan 1-2-10 warranty statute protects buyers on new residential construction, but it does not make builder contracts balanced. Statutory warranty and contractual fairness are different protections.

Not a Resale Contract

How Do Builder Contracts Differ from MLS Agreements?

Resale transactions in Michigan typically use the Michigan Realtors purchase agreement, which includes inspection contingencies, appraisal contingencies, and mutual remedies between buyer and seller. Builder contracts replace that framework with the builder's own terms.

Common differences include limited or no inspection contingency, a unilateral right to extend closing, specifications incorporated by reference, and deposit structures that become non-refundable after defined milestones. You are not buying an existing home with known conditions. You are buying a home that will be built to a specification sheet that may not match the model you toured.

For a broader comparison of new construction and resale paths, read our new construction vs. resale guide. If you have not toured yet, start with Before You Visit a Model Home and REALTOR for New Construction.

What's in the File

What Documents Are in a Builder Contract Package?

The contract package is rarely one document. When a builder says "here is the standard contract," they usually mean a bundle. Ask for the full package on your first tour, not when you are ready to write a check.

Purchase agreement with price, lot, elevation, and core terms
Floor plan and elevation sheet showing what you are building
Community declarations or HOA documents when applicable
Design center selections summary once choices are made
Deposit schedule exhibit with due dates and refundability rules
Written warranty document plus statutory references
Financing addendum if you use the builder's preferred lender

Derica's Pro Tip

Request the purchase agreement, deposit schedule, and warranty document when you first tour, not at the design center. Contract clarity should precede the emotionally charged upgrade appointment.

Read These First

Which Contract Sections Should You Locate Immediately?

You do not need to memorize every page. You do need to know where the high-risk sections live. These seven areas drive most buyer surprises after signing.

Purchase price and inclusions. What is base price versus upgrade price? Appliances, garage door openers, landscaping, sod, mailbox, and basement finish are frequently excluded or partially included.
Deposit schedule. When is each deposit due, how much, and under what conditions is it refundable?
Estimated completion and closing date. Is the date binding or an estimate? What triggers extensions?
Change order process. How are changes requested, priced, and approved in writing?
Warranty terms. Builder warranty plus Michigan statutory coverage. Know both.
Inspection rights. Does the contract permit buyer inspections at pre-drywall and final? If not stated, assume they are not permitted without an addendum.
Default and remedies. What happens if the buyer or builder fails to perform?

Risk Allocation

Why Do Builder Contracts Favor the Builder?

Builder contracts are drafted by the builder's attorneys to shift risk toward the buyer. That is not a moral judgment. It is how these documents are written. Volume builders sell dozens or hundreds of homes per community. Standardized contracts protect their operations. Knowing where you still have room to negotiate helps you use it before you sign.

Clause Type	What It Typically Says	Buyer Impact
Closing date	Estimated or on-or-about with automatic extensions	Hard to plan lease end, school start, or rate lock expiration
Deposit forfeiture	Deposits become non-refundable at permit, framing, or execution	Walking away after a milestone can cost thousands
Material substitution	Builder may substitute equal or better materials	Model finishes may not match delivered product
No inspection contingency	Buyer waives termination based on inspection findings	Defects addressed through warranty, not negotiation
Force majeure	Weather, labor, materials, or permit delays extend timeline	Builder not in breach for long delays
Limited damages	Buyer remedies capped; no consequential damages for delay	No compensation for interim housing or rate lock extension
Binding arbitration	Disputes resolved through arbitration, not court	Limits legal remedies available to buyers

Michigan Reality Check

I review builder contracts before my clients sign, not after. The clauses that matter are never on the sales brochure. Buyers who sign at the model home desk without reading deposit and substantial completion sections discover months later that a $15,000 initial deposit became non-refundable at permit pull, and the closing date was a target, not a promise.

Where You Have Leverage

What Is Actually Negotiable?

Production builders rarely change core contract language for one buyer. What can sometimes move: lot premium reductions, closing cost credits on inventory homes, design-center allowances, inclusion of items normally extra such as garage door openers or sod, extended rate lock assistance, and addenda permitting independent inspections at pre-drywall and prior to closing.

Semi-custom and custom builders have more flexibility on contract terms, deposit schedules, and completion guarantees. Your REALTOR compares incentive packages across communities so you evaluate net cost, not just the shiniest promotion on the model-home desk.

Read our REALTOR for New Construction guide for how buyer representation helps before and during contract review.

Earnest Money

How Do New Construction Deposits Work?

In new construction, earnest money is not one check at offer. It is a series of deposits tied to milestones, each with its own refundability rules. This is where buyers lose the most money when financing shifts or they change their mind after falling in love with a floor plan.

Southeast Michigan production builders commonly structure deposits in three to five increments. A representative schedule on a $450,000 home might include an initial deposit at contract signing, a second deposit at permit pull, and additional deposits at framing or drywall. Each line in the exhibit tells you when money becomes non-refundable.

Illustrative Deposit Schedule

$450,000 base contract in an active Wayne or Oakland County subdivision

Initial deposit at signing: $5,000 (often refundable until permit pull)

Second deposit at permit: $10,000 (commonly non-refundable after this point)

Framing or drywall deposit: $5,000 to $15,000 (varies by builder)

Schedules vary by builder and community. Your exhibit controls, not this illustration.

Worth knowing

Do not sign a purchase agreement while you wait for clarity on deposits or financing. Pausing one day to review the schedule with your REALTOR costs far less than discovering non-refundable language after a job change or loan shift.

Finishes and Specs

What Does "Builder's Discretion" Mean for Your Home?

Most builder contracts include language allowing substitution of materials of equal or better quality at the builder's discretion. The exact cabinet model, tile lot, or fixture brand in the model home may not be what is installed in your home.

Your selections sheet, signed at the design center, is the enforceable document for finishes. If it is not on the selections sheet, it is not guaranteed. Model homes show upgraded packages. Base contracts often include a different level of finishes than the home you toured.

We help clients map selections to the spec sheet, spot allowances, and flag items that should be structural line items, not surprise upgrades billed later. For design center strategy and upgrade budgeting, read our Design Center Upgrades guide or download the New Construction Blueprint.

Buyer Inspections

Do Builder Contracts Allow Independent Inspections?

Many builder contracts do not include a buyer inspection contingency. Municipal inspections confirm code compliance. They do not always reflect buyer-quality standards or catch drainage, HVAC balance, or incomplete work from your perspective.

Many Michigan buyers schedule a pre-drywall inspection after mechanical systems are in but before walls close, plus a final inspection before closing. If the contract does not permit those inspections, ask for an addendum before you sign. Our New Construction Inspection Guide covers what to schedule, what to look for, and how Michigan's 1-2-10 warranty protects you after closing.

Derica's Pro Tip

Ask about inspection rights in writing before contract execution. "The builder has quality control" is not the same as an independent inspector working for you with a report you can reference at walkthrough and warranty claim time.

After Closing

What Warranty Protection Do Michigan Buyers Have?

Michigan's New Home Buyer Protection Act (MCL 408.551 et seq.) sets warranty periods for workmanship, systems, and structural components. Builders also provide a written warranty document in the closing packet. That framework helps, but claims still require documentation, timely notice, and follow-through.

Inspection reports and dated photos give you a baseline if something shows up in the first year. Statutory warranty and contractual warranty are related but different. You need to understand both, not assume the builder brochure covers everything.

Michigan Legal Context

For production homes, agent review of the contract is usually sufficient. For semi-custom and custom builds above $500,000, or any contract with a draw schedule tied to construction milestones, budget for a Michigan real estate attorney to review the agreement before signing.

Your Checklist

What Should Happen Before You Sign?

The model home sells the dream. The contract defines the transaction. Treat signing day as the end of a review process, not the beginning of one.

Full contract package received before the design center or deposit checks
REALTOR registered with the builder if you are using buyer representation
Pre-approval from a lender who understands new-build timelines
Deposit schedule reviewed line by line for refundability triggers
Closing date language understood including extension rights
Selections and base inclusions mapped against what you toured
Inspection addendum requested if not already in the contract
Financing contingency confirmed if your lender requires it for new construction

Have not toured yet?

Read Before You Visit a Model Home and REALTOR for New Construction before you sign a registration card or deposit check.

Before You Visit a Model Home REALTOR for New Construction

The Bottom Line

So, What Should You Do Before You Sign?

Read the full contract package. Ask where deposits become non-refundable. Confirm inspection rights in writing. Compare the base spec to the model home you toured. Bring your REALTOR into the review before you commit.

Builders invest in model homes and design centers because they want you to have a good experience building with them. That experience goes better when you understand the contract before emotion and upgrade selections take over the conversation.

That is what this guide is here for. We want you to sign with clarity, not pressure, and to know what happens if timelines shift, materials substitute, or warranty questions arise after closing.

The model home shows what is possible. The contract shows what you are actually buying. Read both before you commit.

Disclaimer

New construction transactions involve builder-specific contracts, warranty statutes, financing timelines, and registration policies that vary by builder and community. Builder sales consultants do valuable work for their employer; this guide explains contract structure and buyer review steps. It is not meant to disparage any builder or sales professional. This content is educational and does not constitute legal, tax, or financial advice. Consult your REALTOR, lender, attorney, and inspector for guidance on your specific purchase.

New Construction Questions

Frequently Asked Questions

Is a builder contract the same as a resale purchase agreement in Michigan?+

No. Resale transactions in Michigan typically use the Michigan Realtors purchase agreement with inspection and appraisal contingencies. Builder contracts are proprietary documents drafted by the builder's attorneys. They replace standard contingencies with builder-controlled timelines, deposit schedules, and limited inspection rights.

Can I negotiate a builder contract?+

Some terms are negotiable even with production builders: lot premium reductions, closing cost credits, upgrade allowances, and addenda permitting independent inspections. Core risk-allocation language rarely changes for a single buyer. Semi-custom and custom builders offer more flexibility.

When do builder deposits become non-refundable?+

It varies by builder and contract. Many Southeast Michigan production builders make initial deposits refundable until permit pull or framing, then non-refundable at defined milestones. The deposit schedule exhibit tells you exactly when each check becomes at risk. Read it before you write the first check.

Does the builder contract include inspection rights?+

Not automatically. Many builder contracts do not grant a buyer inspection contingency. If inspections are not stated, assume you cannot terminate based on findings. Ask for an addendum permitting pre-drywall and final buyer inspections before you sign.

What does "substantial completion" mean in a builder contract?+

It is the builder's definition of when the home is finished enough to close, even if punch-list items remain. That language affects when your rate lock, lease end, and closing deadline pressure start. Your REALTOR should clarify what triggers substantial completion versus final walkthrough completion.

Can the builder substitute materials without my approval?+

Most contracts allow substitution of materials of "equal or better quality" at the builder's discretion. That means model-home cabinet lines, tile lots, or fixture brands may differ in your home. Your signed design center selections sheet is the enforceable finish document.

What happens if my closing date is delayed?+

Builder contracts often use estimated or on-or-about closing dates with automatic extensions for weather, labor, materials, and permits. The builder is usually not in breach for months-long delays. You may still face rate lock expiration, interim housing costs, or lease overlap without contractual compensation.

Do I need a real estate attorney to review a builder contract?+

For most production homes, thorough REALTOR review is sufficient. For semi-custom or custom builds above $500,000, or any contract with milestone draw schedules, budget $500 to $1,500 for a Michigan real estate attorney before signing. The cost is small relative to deposit exposure.

What warranty comes with a new construction home in Michigan?+

Builders provide a written warranty, and Michigan's New Home Buyer Protection Act (MCL 408.551 et seq.) sets statutory workmanship, systems, and structural periods. Contractual warranty and statutory warranty are related but different. Both require timely notice and documentation for claims.

Should I sign a builder contract at the model home?+

We do not recommend signing the same day you tour. Request the full contract package when you first visit, review it with your REALTOR, and confirm financing for new-build timelines before you write deposits. The model home is for research. The contract desk is for commitment.

About the Author

Derica Wade

Derica Wade is Associate Broker with Real Estate One and leads the Hearts to Homes Team from Plymouth, Michigan. She works with buyers and sellers across Wayne, Oakland, Washtenaw, and Livingston counties, including extensive new construction experience in Canton, Northville, Brighton, Saline, and surrounding Metro Detroit markets.

This guide is part of the Hearts to Homes Resource Center, written and reviewed by Derica based on builder contracts and transactions her team has actually guided. It is kept current; see the last reviewed date in the hero above.

Read Derica's full background · Get in touch

Before You Go

Every home purchase is unique, and every builder, community, purchase agreement, lender, municipality, and title company may have different policies, timelines, requirements, and procedures.

The information in this guide is provided for educational purposes to help you better understand the new construction process and ask informed questions along the way. It is not intended to replace the guidance of your REALTOR®, builder, lender, inspector, attorney, title company, or other professionals involved in your transaction.

Builder policies regarding third-party inspections, construction access, walkthroughs, warranties, completion standards, timelines, and closing procedures can vary. Always review your builder’s specific requirements and consult with the appropriate professionals regarding your individual situation.

If you’re buying a new construction home in Southeast Michigan, we’re always happy to answer your questions and help you understand what applies to your specific home, builder, and community.

When You Are Ready

Reviewing a Builder Contract? Start Here.

If this guide answered your questions, you are ahead of most buyers who sign at the model home desk without reading the deposit exhibit. When you are ready to compare builders or walk through a contract line by line, our team and Resource Center guides are here.

No pressure. No pitch. Just resources when you need them, and a conversation when you are ready.

"The model home inspires. The contract defines the deal. Read both before you commit."

REALTOR for New Construction Before You Visit a Model Home Download the NC Blueprint

The Hearts to Homes Team

Matching hearts to homes… and now communities, too.

Call or text: 734-323-4486 · derica@heartstohomesmi.com