What Happens If I Miss A Pre Construction Deposit Payment?
Most deposit structures for pre construction projects are spread out enough that it allows buyers to comfortably make the total deposit amount – typically 20% for most condos. Furthermore, the clear payment dates set out in your Agreement gives buyers a timeframe to budget accordingly.
However, sometimes unforeseen events come up and you cannot, for a multitude of reasons, make your deposit payment.
So, what happens in this case?
Technically, on missing a payment you are defaulting on your contract. The developer in this case is within their right to repossess the unit from you.
This is the worst case (and a risk that you need to consider).
However, most developers will contact you about the missed payment to settle up accordingly.
If you cannot make the payment for whatever reason, it is important to contact the developer as soon as possible and let them know. There may be a way to find a solution that works for everyone. At this stage, it may be worthwhile to involve your lawyer as well to ensure you are protected in any negotiations.
Sometimes, buyers forget the upcoming deposit withdraw dates and do not leave enough money in their accounts to cover the deposit payment.
When this happens, the deposit is returned as insufficient (NSF) and the developer will contact you to settle up. You will also then be subject to paying an NSF fee as is typically outlined in your Agreement.
Being Conservative Upfront
While sometimes life can throw you a curveball and you may find yourself in a situation where money is tight, it can really help to be as conservative as possible at the start of your purchase to ensure you aren’t going to leave yourself too stretched in case something goes awry.
Making those deposit payments is critical – otherwise you may forfeit your unit and lose the deposit you have paid up until that point.
Giving yourself a little breathing room at the start can ensure you are less fragile to sudden changes in your income or a rise in your expenses, and can ensure you have a stress-free experience throughout your pre construction purchase!
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