Purchasing property that hasn’t been built yet is risky. If the building developer declares bankruptcy before completing the project, this could be a problem. Here’s how to protect your investment.

Read Your Building Contract

First, check the terms of your building contract. It should say what happens if your developer cancels the project.

In most cases, a new developer will take over the project. Construction should resume as normal after this.

Ask For Your Deposit Back

You may be able to get your deposit back if you put it into escrow. An escrow company holds onto your money until the project is finished. If the developer never completes the work, your deposit can be returned by the escrow company.

Send a copy of your development contract to the escrow company and let them know what happened. They will verify the bankruptcy filing and should refund your money.

Be Prepared To Lose Potential Interest

Be prepared to lose interest if your developer can’t complete the project. Even if your deposit is returned, you would have been better off investing it somewhere it could accrue interest.

Keep this in mind before putting a deposit on property that’s still in development. You could buy the property outright once it’s finished if you keep the money in a savings account. Plus, you’ll be earning interest the whole time.

How Future Condo Owners Can Protect Their Investment

Don’t sign a contract without terms for delayed or canceled projects. Always use an escrow service to keep your deposit safe and never pay a developer cash. Even if you trust the developer, you should take steps to protect yourself.

A lawyer can also help. You should always have a qualified construction litigation attorney review your contract before signing to look for potential issues. A good lawyer can make sure the terms work for you before they become legally binding.

Contact Veteran Florida Real Estate Attorney Joseph Hughes

Are you waiting on a developer to fulfill empty promises? Get help taking control of the situation now. Call our office today to book a consultation by dialing (954) 256-512. Or you can fill out our short contact form and our attorney will get right back to you.