Home › Markets › Contingency Guide › New Construction Contingencies: PCS Clause, Builder Delays, and VA Escape

New Construction Contingencies: PCS Clause, Builder Delays, and VA Escape

The builder’s purchase agreement is not the standard state-approved resale contract. It was written by the builder’s attorneys to protect the builder. The contingencies it provides are fewer, narrower, and often less protective than resale contracts.

How Standard Contingencies Apply in New Construction

Each core contingency behaves differently in a builder contract: (1) Financing contingency: most builder contracts include a financing contingency, but its scope may be narrower than resale — covering only standard mortgage denial, not jumbo overlay changes. A specialist negotiates broader financing contingency language before signing. (2) Appraisal contingency: some builder contracts limit or remove the appraisal contingency, particularly for to-be-built homes where the appraisal occurs months before closing. A specialist negotiates appraisal protection and a right to exit if the appraisal gap exceeds a threshold. (3) Inspection contingency: builder contracts typically do not include a standard inspection contingency. Instead, they provide a pre-closing walk-through right. A specialist negotiates phase inspection rights (foundation, framing, final) written into the contract. Full new construction context: Builder contract red flags › — Phase inspections ›.

Construction Delay Clauses: The Builder’s Protected Default

The most significant new construction contingency not present in resale contracts is the buyer’s rights when construction is delayed. Most builder contracts allow 6–12+ months of delay under force majeure provisions without buyer cancellation rights. This is not a contingency protecting the buyer — it is a builder protection limiting the buyer’s exit rights. A specialist negotiates: (1) an enhanced buyer cancellation right if construction is delayed more than 90–120 days; (2) rate lock extension cost coverage if builder delays expire the buyer’s rate lock; (3) a narrower force majeure definition that excludes endemic construction conditions. Full guide: Construction delay rights ›.

PCS Contingency: Military Buyers and New Construction

Military buyers purchasing new construction face a specific risk: receiving new PCS orders during the construction period (6–12+ months). The PCS contingency clause allows the buyer to cancel and recover deposits if orders change materially. Standard builder contracts do not include a PCS contingency. A specialist negotiates it before signing: (1) the clause allows cancellation if the service member receives orders to a new duty station; (2) deposit recovery is full, not subject to builder-imposed cancellation fees; (3) the clause defines the orders that qualify (permanent change of station, deployment over 180 days). Without the PCS contingency, a military buyer who receives orders during construction may forfeit a 5–10% deposit ($50K–$150K on a $1M purchase) on a home they can’t occupy. Full military context: Military buyer guide ›.

VA Escape Clause in New Construction

VA-financed new construction purchases require the VA escape clause. In new construction, the escape clause has specific nuances: (1) To-be-built appraisal timing: the VA appraisal for a to-be-built home occurs at or near construction completion, which may be 6–12 months after the contract is signed. The escape clause protects the buyer at the time of the appraisal, not at the time of contract. (2) MPR compliance for new construction: builder-installed systems must meet VA MPRs. A phase inspection by an independent inspector is the buyer’s best tool to identify MPR issues before the VA appraisal visit. (3) Builder contract and VA requirements: the builder’s contract may not include standard VA escape clause language. A specialist VA-experienced agent ensures the required VA clause is added before signing. Full VA new construction context: VA loan explained › — VA jumbo guide ›.

All Contingency Guides: Financing — Appraisal — Inspection — Waiving — Seller Repairs — Walkthrough — Luxury Tier — VA Contingency

Frequently Asked Questions

Do standard contingencies apply in new construction?

In modified forms. Builder contracts provide narrower financing and appraisal protections than standard resale contracts. Inspection contingencies are typically replaced with pre-closing walk-through rights. Phase inspection rights must be negotiated and written into the contract.

What is a PCS contingency in new construction?

A contract clause allowing military buyers to cancel and recover deposits if they receive Permanent Change of Station orders during the construction period. Not standard in builder contracts — must be negotiated before signing.

Does the VA escape clause apply to new construction?

Yes. The VA escape clause is required in all VA-financed purchases including new construction. In to-be-built homes, the VA appraisal occurs at or near completion — the escape clause protects the buyer at that point.

How long can a builder delay without letting me cancel?

Most builder contracts allow 6–12+ months of delay under force majeure provisions without buyer cancellation rights. A specialist negotiates an enhanced cancellation right (after 90–120 days) and rate lock extension cost coverage before signing.