Does the deposit should be forfeited if the developer fails?

Posted: September 10th, 2013 | Author: | Savings

Between the signing of various agreements, applying for loans and credit we may research to buy a flat directly from the developer, who probably is waiting for us to pay a deposit, which ensures the financial security of the transaction. But will forfeit the deposit paid if the developer are pending formalities?

Storm Crypt / photo on flickr

Storm Crypt / photo on flickr

It can be said that the deposit shall be forfeited and shall not be returned to us. Thus, the law says that governs this type of collateral and bankruptcy of the company. The problem may be recovering the money from an insolvent developer.
By law, the deposit should be kept by “escrow account”, which should not disappear until you finalize the transaction, or until investment reaches a certain stage. Money from this account in the event of a fail are extracted from the rest of the bankruptcy estate and used to refund the customers.

But we cannot rule out the possibility that the developer failed to ensure this requirement, or money in the accounts of the trust is not enough and refund will not be possible. It is against the law, but there is little we can do about it. In even worse case are the people who have signed the contract before the Act came into the force on the protection of the rights of the buyer, because their deposit and any other costs incurred in such a situation can be just forgotten. Chance to recover them is quite minimal.


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