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The fact that all this came to light now is fortuitous.
Regardless of whether your parents stay where they are 700 miles away or move near you, it appears the new build is not a good idea.
The only rush at this point is to cancel the contract (if it makes financial sense) and give SDad a chance to recover until he can decide where he wants to live.
Does he have family besides your moms or will you be his caregiver when the time comes?
We have our own personal troubles with a house build. Here, house prices have soared and then tumbled, while building material prices have just soared. This makes damages for getting out of a contract quite complex. Please check before you make decisions.
The other option with remaining where they are is finding caregivers that you/they can trust that may have to become 24/7 caregivers as both mom and dad decline if they remain in their house. (although with AL/MC living you do not have to worry about homeowners insurance, maintaining the house, electric bills, gas bills....)
That said though 700 miles is a distance that you have to travel if you need to be there for medical reasons for either of them. Would it be easier if they were in AL/MC closer to you?
And side note, if the New Build house was not built fully accessible I would not even bother with moving in, sell it if it has already been purchased. Do not complete the sale if it has not been done
If he needs assisted living already, moving into a place with no support isn’t going to work well. Moving temporarily into your place is likely a very bad idea given his willfulness even if he doesn’t currently need help.
Depending on how hot the real estate market is in your area it might be worthwhile to close on the purchase and resell. How much of a deposit is non refundable?
Step dad needs to prepare for the real future where he may require assistance too and not the fantasy future this new house implies.
I would opt out if this house and be thankful this happened before they closed on the house and moved in.
My neighbor who has familly living nearby has heart problems, including a bout with sepsis and needing a new valve. He is still here with neighbors occasionally helping him for minor things. His family had him sell off a lot of furniture so that he only uses 1 bedroom, a study and his living room only has a sofa and chair. So he downsized.
If dad can still walk, toilet and remembers to have meals, maybe the first step is Independent living where he goes to a community room for dinner and his laundry and light housekeeping is done once a week. His friends in the facility will notice if he does not show.
So maybe you need to find an in between living quarters where he really downsizes to an apartment for seniors. If you feel that he may have a rapid downhill slide, there are facilities with 3 to 5 levels of care. In that case a move would just occur in a different hallway and maybe the apartment configuration does not significantly change. Dad and mom could be in the same facility, just different levels of care.
For the COVID issue, just keep wearing masks. N95s are also not hard to find. Unfortunatly, this may go on for the rest of our lives.