Why builder contracts feel one-sided — because they mostly are
When you sit down with a new construction sales representative in Utah and they slide a contract across the table, the document is typically 20 to 40 pages long, written by the builder's legal team, and designed to protect the builder's interests first. That is not a criticism — it is just what it is. The builder writes the contract, and they have done it thousands of times. Most buyers are doing it once.
The impulse to skim it and sign is understandable, especially when the sales center is nice, the model home is beautiful, and you have been waiting months for a lot to become available. But the terms in that document govern everything from how much the price can change before closing to what happens if the home takes 18 months longer to complete than originally promised. Reading it carefully is worth the time.
This article is not legal advice, and nothing here should substitute for an attorney review if the contract terms are complex or the purchase is large. What this is, is a practical guide to understanding what builder contracts are trying to accomplish, where buyers commonly get surprised, and what questions to ask before you put ink on anything.
What a builder contract is actually trying to accomplish
A builder contract has two primary purposes from the builder's perspective. The first is to lock in your commitment and your deposit so they can proceed with construction or lot reservation with confidence. The second is to give themselves maximum flexibility on price, timeline, and finishes while giving you minimal flexibility on the same things.
That asymmetry is normal and not necessarily malicious. Building homes in Utah involves genuine uncertainty — material costs fluctuate, subcontractor availability varies, city inspection timelines are unpredictable, and lot conditions sometimes reveal surprises. Builders build flexibility into contracts because they need it to operate profitably. Your job as a buyer is to understand exactly how much flexibility you are granting them and decide whether you are comfortable with it.
The document will typically include a purchase price and lot identification, a description of what is included in the base price versus what costs extra, an anticipated completion timeline and how it can change, escalation or price adjustment provisions, the deposit structure and what happens to your money if the deal falls apart, your contingency rights (or lack thereof), the warranty terms, and the process for selections, upgrades, and allowances.
The sections to read twice
Price escalation clauses are one of the most significant terms in any new construction contract and one that buyers frequently gloss over. Many Utah builder contracts include language that allows the builder to increase the purchase price if material costs rise above a certain threshold between the contract date and closing. During periods of significant lumber, concrete, or labor cost movement, these clauses have resulted in buyers facing price increases of tens of thousands of dollars late in the build process. Read this section carefully. Understand the specific trigger conditions, how much the price can increase, whether there is a cap, and what your options are if the increase exceeds your comfort level or your lender's approval.
Timeline and delay provisions typically give builders broad latitude to extend the completion date without penalty and without giving the buyer the right to cancel. A contract that says the home will be complete in approximately 12 months may also contain language allowing the builder to extend by 6 months or more and requiring you to remain under contract throughout. If you are selling your current home, timing a move around a new construction completion date is genuinely difficult when the builder can move that date without consequence. Understand exactly what the contract says about timeline, extensions, and your rights if the delay is substantial.
What is and is not included in the base price is worth reviewing line by line. Builder contracts use the term "allowance" to cover items like flooring, lighting, cabinets, and countertops — a dollar amount allocated toward that category from which you choose your finishes. Allowances are often set at levels that correspond to builder-grade options, which means any upgrade beyond the base level costs extra. A $3,500 flooring allowance sounds reasonable until you realize the flooring options you actually want are priced at $7,500 and the difference comes out of pocket. Go through the selections process mentally before you sign and understand what your realistic upgrade budget needs to be.
Deposit terms and refundability vary significantly between builders. Some Utah builders require 1%–3% of the purchase price as an initial deposit, with additional deposits due at various milestones. Whether those deposits are refundable — and under what conditions — is a critical term. If your financing falls through, if you lose your job, or if you simply change your mind, the contract will dictate whether you get any of that money back. Some contracts have a defined financing contingency that protects your deposit if you cannot obtain a mortgage; others do not. Read this section carefully and understand your exposure.
Arbitration clauses are common in builder contracts and require you to resolve disputes through arbitration rather than litigation. This is not inherently bad, but it does limit your options if something goes seriously wrong with the home post-closing. Understand what the arbitration process looks like and whether there are any categories of dispute where you retain the right to pursue other remedies.
Warranty terms in new construction are governed partly by Utah law and partly by the builder's own warranty program. Utah has implied warranties for new construction, but what the contract says about the builder's express warranty — what is covered, for how long, and how claims are processed — is what you will actually be relying on when a problem surfaces. Structural warranties, systems warranties, and workmanship warranties often have different coverage periods. Make sure you understand what each covers and what the process is for getting a response on a warranty claim.
Questions to ask before signing
Before signing a new construction contract in Utah, the questions worth getting answered in writing include: Can the purchase price change after I sign, and under what conditions? What is the anticipated completion date and how many times can it be extended? What is included in the base price and what are the standard allowance levels for each category? What happens to my deposit if I cannot obtain financing? Is there a financing contingency, and if so, what are the conditions? What does the warranty cover and for how long?
If the sales representative cannot answer any of these questions clearly, ask for the relevant contract section in writing before signing. Vague verbal assurances from a sales representative are not the same as contractual terms, and they do not protect you if a dispute arises.
For a purchase of significant size or complexity, having a real estate attorney review the contract before signing is worth the cost. A Utah real estate attorney can typically review a builder contract for $300–$600 and flag terms that are unusual, negotiable, or particularly risky. Builders negotiate contracts less often than buyers assume — particularly on base price — but some terms, like the escalation clause cap or the financing contingency language, are more negotiable than others.
How I help buyers navigate builder contracts
When I work with buyers on new construction in Utah, I review the contract with them before they sign and flag the sections that warrant closer attention or a specific conversation with the builder. I also help buyers think through the full picture: what is the realistic cost of upgrades beyond the base price, how does the anticipated timeline interact with their current housing situation, and what are the risks if things go sideways.
One thing I want buyers to understand clearly: having your own agent represent you in a new construction transaction costs you nothing — the builder pays the buyer's agent commission — and it gives you someone whose job is to look out for your interests, not the builder's. The sales representative in the model home is the builder's employee. That is an important distinction to keep in mind throughout the process.
If you are getting ready to sign a new construction contract in Utah and want to walk through it together first, reach out and we can set that up. For a broader look at how new construction compares to resale across key factors, this breakdown is worth reading: New Construction vs. Resale in Draper.
