When should I use the Offer to Purchase and Contract – New Construction (Form 800-T) instead of the New Construction Addendum (Form 2A3-T)?

QUESTION: I was looking at the forms changes going into effect July 1st, and I see that Form 800-T has been significantly edited. Will these edits change when I can use Form 800-T? When should I use the New Construction Addendum with the Offer to Purchase and Contract (Form 2-T) instead of Form 800-T?

ANSWER: As for your first question, the note at the top of Form 800-T has not changed, and the situations in which it is appropriate to use the form will continue to be the same.

Form 800-T was designed for situations when the seller, or a contractor engaged by the seller, will construct a home on the property and then convey the property to the buyer. It is a construction contract plus a contract for the sale of land in one form. If construction is going to occur only after the buyer already owns the property, then all the buyer needs with the builder is a construction contract, which will not include the sale of the property itself. There is not a standard form construction contract, and therefore the buyer will need to find an attorney to assist them if the builder does not have an acceptable form available.

Form 800-T is still not appropriate when the buyer will provide the financing for construction. This is because it would be very risky for a buyer to pay for the cost of constructing a house when the buyer does not yet own the land. If a dispute arose between the seller or builder and the buyer, or if the seller or builder is unable to convey good title to the property for some reason, the buyer risks the expenditure of significant time and expense to recover what they have paid, or the possible loss of their investment altogether.

The New Construction Addendum (Form 2A3-T), on the other hand, is designed for use with Form 2-T when construction of the new home in nearly complete or has been fully completed. Although the addendum does contemplate that the seller or builder might make additional minor improvements, it lacks the detailed provisions regarding the construction process that are included in Form 800-T. However, Form 2A3-T does contain an important warranty of construction that establishes the seller’s or builder’s duty to make any necessary repairs and corrections, and therefore, even if the new home is fully complete, the addendum is a good idea to include in the purchase contract. Note that adding the addendum after Form 2-T has been fully executed may raise issues for lack of consideration, and it is therefore important that the New Construction Addendum be included with the offer from the beginning rather than added later.

As for the changes to Form 800-T itself, the changes are meant to make the form easier to read and more user-friendly. If you have any questions about the new edits, feel free to reach out to the NC REALTORS® Legal Hotline for guidance.

Release Date: 6/6/2024