As an attorney handling condominium contract deposit disputes, I have concerns that the current economic crisis is going to further impair the ability of those seeking to recover their construction deposits from doing so. Generally speaking, many developers required twenty (20%) percent down, half of which was held in escrow while the other half was used for construction purposes. Many of those individual condominium units that were purchased never closed, leaving the developer with a loss of funds to pay the debts on their mortgages and/or their construction financing. This could lead to banks foreclosing on the property or could result in the court appointing a receiver to run the developer’s business.
Because of the economic crisis, developers will have trouble obtaining funds on credit to stave off foreclosure or receivership. In either scenario, a unit purchaser will have a tremendous difficulty recovering their deposit in excess of what is being held in escrow. For that reason, it makes sense that a purchaser seeking to recover their deposit back should initiate the process sooner rather than later as, it would seem, the longer one waits, the less likely it will be to recover a deposit in an amount greater than what has been held in escrow.
Of course, however, each case is different and should be evaluated on its individual merits. This article does not constitute legal advice or the formation of an attorney-client relationship, and is not for re-publication without express permission of the author.