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Building a new house? What you should know about your deposits

Putting money down when you are buying a house is standard practice. That money, which can be the earnest money deposit as well as your down payment, includes one-time payments that serve as an indication of good faith on your part. If you are building a home, however, you may have to make several more deposits throughout the course of a project, depending on the schedule set by your builder.

No matter when you are required to pay your deposits, there can be situations where you find yourself wanting your deposit back. However, in order to do this, you should understand a few things about construction deposit laws in Florida.

First, you should know that basically, three things can happen with your deposit: 

  1. It will be deposited into an escrow account and ultimately go toward your down payment.
  2. You can recover it.
  3. The builder or developer keeps it.

If your money is in an escrow account, both you and the developer must approve the withdrawal of these funds. However, you can waive the option to have the money deposited into an escrow account. If your builder violates the conditions of establishing, depositing or withdrawing money from an escrow account, you could seek civil action.

You could also recover your deposit if the builder breaches the contract you should have in place. If the builder does not meet deadlines or otherwise violates the terms of your contract, you can recover your deposit.

If you are the party that fails to comply with the terms set in your contract, you could ultimately be giving up your deposit, allowing the builder to keep it. In these situations, the buyer will need to send you a written notice, seek an affidavit showing you are the party in default and then he or she will be able to recover the money from an escrow account.

A deposit can be a very tiny percentage of the overall amount you are paying to build a home, but that doesn't make it insignificant. If you have concerns about losing or recovering a construction deposit, it can be crucial that you consult an attorney to understand your legal options and rights.

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