Three weeks ago I closed on a new home from a large developer. The constuction time and closing was 11 months since I signed the Purchase Contract.

In the Purchase Contract it is stated "Buyer is further warranting Buyer is not buying the home primarily for investment purposes, either on behalf of the Buyer or any other person or entity, and does not intend to resell the home within one (1) year after close of escrow and conveyance of fee title to Buyer by an instrument of record "(Closing)""

At the time I signed the Purchase contract I had every intention of moving in and making it my primary residence. However, 11 months later my personal circumstances have changed and I would now like to resell the home.

Would I be in violation of the purchase contract? Further, since the property is now closed is the purchase contract still valid?

No, because by the time you put it up for sale (next day or three) and even if you got an accepted offer the first week, chances are the person will be getting financing so it won't close for another 3 to 4 weeks which will put you past the 12 months.

-J

Josh I think you misread my post. I closed 3 weeks ago.
From the Contract resell the home within one (1) year after close of escrow and conveyance of fee title to Buyer by an instrument of record "(Closing)""

What does the contract say happens if you close before the year is up???

If the developed put that clause in your sales agreement you and he can mutually agree to change it.

Well if before I took possession of the property the seller can claim breach of contract, cancel the sale and retain all monies.

I find nothing addressing the developers recourse after I have taken possession of the property.

This has become a "Standard" Clause in most new development properties in my area and almost every condo.

Most have the language buried in it somewhere that you will loose 100% of any profit base on initial closing sale price and resulting closing sale price. Meaning you actually can walk away but be down the closing cost.

Developers are doing this because they can now sell all the units they need to sale up front in pre construction that their lenders need and also keep out speculators that cause values to inflate and at some point cause re-sale problems for everyone.

I know of three court challenges to the agreements 2 from buyers turned sellers and one from a declared short term investor who was refused a contract... all have been adjudicated on the side of the developers.

Yes I have heard it is getting more stringent in many areas. However, there is no such verbage in my Purchase Contract or any other document.

You also need to check the CRR's that apply to your association.... You will probably find the requirement their if not in the basic Purchase Contact.

There is nothing in the CCR's either.

Then you need to have a talk with the developer...

Explain your circumstances and Work something out or plan on an expensive court case with limited probabilities of desirable outcomes..... as in any court case... no one actually wins... except lawyers

Since you did not purchase the home as an investment property and had planned to live in the home as your primary residence you may be able to void that provision. Since subsequent to signing the contract you experienced an unexpected life change that now makes it impossible for you to reside in the home as a principle residence. You should contact a Real Estate attorney and consult with them on this issue.

You might rent it out for a while. Could save you on taxes too. If you move in the first 12 months any gain would be considered ordinary income and taxed at your regular rate. If you hold on to it a little while longer you'll qualify for the capital gain rate. And if you decide to 1031 the deal you can even defer those. This looks like an opportunity to get started as an investor.

Here is an update. I have consulted with two local law firms that specialize in real estate.

This is first version of the "no sell" clause that I have in my contract, and it is very, very weak. Later versions, and there are several are much more defined, restrictive and enforceable.

Both attorneys believe that the developer would have a hard time proving his case in arbitration. The contract requires arbitration, so it wouldn't go to court. Of course there are no guarantees!!

They both believe that I have the right to sell the property since I entered the agreement in "good faith" and with "intent" to occupy.

The developer has sent out written notices via their attorneys to sellers with this first version, but to their knowledge not pursued it any further.

However, the developer has pursued later versions and won in arbitration.

Their advice was to sell it with low level marketing (no sign in the yard etc) and ignore any initial letters from the developer unless they are actually pursuing arbitration.

They believe the For Sale sign in the yard will be the main point of contention with the developer. Hopefully, without the sign nothing will come of all this.

Wish me luck!!