How To Buy
Like any investment or purchase, there are risks, but with qualified guidance from an experienced Realtor providing information you need to make an educated choice, you’ll know what to anticipate at every step. The Ines Flax team is committed in providing in depth information and guidance upon each projects possibilities so your experience is in line with expectations.
General Schedule of Contracting for Preconstruction Properties
- Generally, a refundable cash deposit of 10% is required with a Reservation in a Preconstruction Condo unit. Funds are typically placed in a non-interest-bearing bank trust account and are fully refundable anytime during the Reservation Phase of the transaction. A Letter of Interest or Reservation is the equivalent of a First Right of Refusal to Purchase where both buyer and developer have the option to cancel a Reservation.
- A second installment of 10% will be due at execution or signing of the Purchase Agreement as per project disclosed schedule. 15 days after execution or rescission period is where the contract is described as “going hard” and commits the buyer and developer together in a binding contract. At this point, all current and future deposits are non-refundable and some of the funds with escrow agent may be available to the developer for building costs.
- Each project will then require buyer to commit additional incremental deposits as per a project’s benchmark schedule toward project completion usually totaling up 50% and sometimes as much as 60%. The final balance is usually due when the building is completed and the contracted unit has been given a Certificate of Occupancy where title can be transferred between developer and buyer.
- If for some reason contracted buyer cannot successfully provide any of the additional deposit or final closing monies, the buyer would be in default and the purchase contract would be voided per clauses in the agreement at original signing. Generally, all previous monies upon deposit are forfeited.
Please keep in mind that the process can vary by project and developer. Therefore it is VERY important as a prospective buyer to fully understand the entirety of the Preconstruction Purchasing process and all of the nuances inherent within. That’s why it’s very important that you obtain advice and guidance from a Preconstruction Specialty Team and read and understand every section of your developer Agreement. We at the Ines Flax team are here to provide you with the best representation and guidance throughout this very exciting time!