Deposit Recovery

Our deposit recovery practice is dedicated to assisting purchasers of preconstruction condominiums and houses in the recovery of their deposits in cases where the project developer has violated either Florida or federal law in the registration, marketing and promotion of preconstruction real estate projects, or has otherwise breached the contract by changing the project or by failing to timely complete the project.

Many people assume that the developers’ contracts are “bullet-proof” because the developers hired the “biggest law firms” to prepare their contracts to protect them.  Most preconstruction contracts, however, are anything but bullet-proof.  In the developers’ rush to the market in 2004-2006, many either over-looked, or simply disregarded laws designed to protect consumers (purchasers).  These laws very often permit the purchaser to cancel the contract and receive the return of his or her deposit.  

Many developers also gave purchasers draft offering condominium documents in the sales process that were later rejected by the state regulatory agency, thereby permitting buyers to revoke their contracts.  Similarly, some developers made changes to the projects and the offering documents, while others violated the federal Interstate Land Sales Full Disclosure Act – either of which may give rise to the right to cancel the contract and receive the return of your deposit.

The most commonly used claims to recover deposits are based upon the following:
•    Breach of Contract
•    Florida Statutes Chapter 718
•    Florida Statutes Chapter 720
•    The Interstate Land Sales Full Disclosure Act
•    The Florida Deceptive and Unfair Trade Practices Act

Virtually none of the preconstruction projects launched during the last four years were contingent on financing, meaning that the contracts require purchasers to close regardless of whether they can get mortgage financing for the projects.  This is significant because the values of the completed projects have plummeted, and are far below the contract prices.  

Many of our clients have tried to close on their purchases, only to find that lenders are refusing to provide mortgage loans because the appraised values of the properties are hundreds of thousands of dollars below the contract prices.  Developers are generally unwilling to offer discounts down to the current market values of the properties, with many seeking to persuade the buyer to use the developer’s “preferred lender,” whom the developer claims “can get financing for the deal.”  Even if the “preferred lender” can get the deals closed, one can only speculate how they can do it when mainstream lenders, such as Countrywide, Bank of America, Washington Mutual, etc. are refusing to finance based on true market appraisals.

Both the state and federal statutes have statutes of limitations, so it is critical that purchasers wishing to seek recovery of their deposits act immediately.  It is also critical that those wishing to recover their deposits protect the portions of their deposits remaining in escrow by not ignoring closing letters and default letters from the developer.  Instead, a lawyer should be retained to protect your rights, and your deposits in escrow, immediately upon receiving closing or default letters from the developer.