Special Order Homes

Consumers who purchase a "special order" home can lose a deposit of up to five percent of the cash price of the home if they try to back out, unless the home is not what was represented or the consumer did not receive a notice of the refund rule.(1) There is no cancellation "window" at all for special order homes, nor does the law make any exception for people who do not get credit approved or do not want the credit terms they finally get. For consumers who are turned down for credit or use the title to their previous home as a deposit, the "special order" no-refund rule can be especially problematic.

After Nationwide Homes reported that a lender had approved them for a loan, a Joshua, Texas man signed a purchase contract, leaving $2,300 down, "When the home was finished, they came back and told me they was having problems getting my credit cleared, and I told them that was already supposed to be done," he wrote to the OCCC. "They run my credit through 6 different financial groups. I told them to stop running my credit and cancel any further proceedings."

The dealer, however, continued to look for lenders and insisted that since he had signed a purchase contract for a "special order" home, he was bound to take the home. "Two days after I requested my money back, I already found another home. They called and told me they had financing for me...They told me I had to take it because I special ordered it."(2) Under current law, this would be true even if the terms of the final financing were not agreeable to the consumer.

Any home that is available but not sitting on the lot can be a "special order" home. When Edward and Leticia G. of San Antonio went to purchase a manufactured home, they got a "special order" home and gave the dealer the title to their existing manufactured home as a down payment. According to their "special order" agreement, a special order home is one that is "not in inventory and must be ordered from the home manufacturer." But when their credit information was processed by the lender, they were turned down. After three letters from the Attorney General, the dealer returned their title.(3)

Under the law, a consumer can back out if the home is not what she ordered. Jaqueline B. of Austin put down $4,000 for a custom home. Then the sales person called to say that her home had not arrived but they had others on the lot she could see. She picked a different home, but asked the dealer to install a bay window. When she arrived to look at the altered home with a contractor, she found many defects and decided to reject the home. The dealer insisted that her "special order" agreement precluded the return of her deposit, even though her real "special order" home had never arrived and the lot home was unacceptable..(4)

1 Texas Manuf. Housing Standards Act, Sec. 6(m).

2 Complaint to Office of the Consumer Credit Commissioner, 7/2/99, Joshua, Texas.

3 Complaint to Office of the Attorney General, 11/5/99, San Antonio, Texas.

4 Complaint to Office of the Attorney General, 10/4/99, Austin, Texas.