Buying a condo in development comes with risks. You could lose money if your developer files for bankruptcy before the project is completed.

Here are some ways to handle this problem.

Check Your Contract 

The first thing you should do is read over your building contract. It should outline the steps you should take if the developer stops working. 

Usually, a new developer is hired to complete the project. This allows construction to continue normally. 

Contact Your Escrow Company 

Most buyers put their deposits in escrow. This is a third-party service that holds the money until your building project is completed. If something bad happens, the escrow company can refund you.

Contact your escrow company to let them know your developer declared bankruptcy. You may need to give them a copy of your building contract. Your funds should be released when the company verifies the developer abandoned the project.

If you paid the deposit to the developer themselves, you have fewer options to get it back. 

You Might Lose Interest 

Unfortunately, you might lose interest if your developer declares bankruptcy. Even if you get your deposit back, that money would have earned interest had you invested it somewhere else. 

This is something to consider when buying unfinished property. You may want to put your deposit in the bank instead of paying your developer so you can earn interest while you wait for your project to be completed. 

If your developer cancels the project, you won’t have lost any money. You also won’t have to wait for escrow to return your deposit. 

How Florida Property Buyers Can Protect Themselves 

Make sure any contract you sign clearly states what happens if the builder goes bankrupt. It should also cover if you will get your deposit back and how. Don’t sign anything before your lawyer has a chance to look over it. 

If the contract you’re given doesn’t protect you, your attorney can draft a new agreement for your developer to sign instead.

Experienced Legal Representation For Florida Developer Disputes 

Feinstein Real Estate Litigation & Business Law can provide you with comprehensive legal support if your developer declares bankruptcy. Our experienced legal team has the skills to negotiate zealously on your behalf to get the best outcome possible. 

Call our office now for a consultation at 954-767-9662 and we can start right away.