What Happens to my Deposit Money if a Project gets Canceled?
I get a lot of great questions sent to me by readers of my blog via my contact me page. Here is one that I thought would make for a good post.
Mike B writes,
Ãƒâ€šÃ‚Â If I were to buy a unit at [X Development] andÃƒâ€šÃ‚Â the project does end up being canceled, would I get my deposit moneyÃƒâ€šÃ‚Â back?
Certainly a timely question in this market. A lot of would-be buyers of new condominiums are now considering the very real possibility that they have bought, or will buy into a development at the pre-construction stage that will not actually get built. Then what happens?Ãƒâ€šÃ‚Â
The biggest question in buyers minds is, as Mike pointed out is what happens to your very hard earned deposit money? Rest assured, your money is protected by law. Deposits on new developments are held in trust, usually by the developer’s law firm. Technically the developer cannot even touch this money. It is set aside until final closing.Ãƒâ€šÃ‚Â
The moral here is if you are buying into a new development, or for that matter, any deposit you ever put down on a the purchase of real estate should always be held IN TRUST.
Some people get caught up into various scams with new developments where some or all of your money is not held in trust, and many of these people have gotten burned.Ãƒâ€šÃ‚Â Jarvis Street Mansions is a recent example of this in Toronto.Ãƒâ€šÃ‚Â
Educate yourself! Protect yourself! And by all means, make sure you are professionally represented when you buy a condo in this city.
Got a question that you want answered? Email me.