These blog entries will dispel common myths and educate you concerning the nuances concerning purchasing, selling, financing, and/or managing real estate in Florida.
QUESTION: What are the advantages and disadvantages of buying a condominium pre-construction in Florida?
Over the last 15 years, many homeowners and real estate investors have made substantial returns on their investment and/or lost all of their investment/down payment purchasing pre-construction condominiums in Miami, Fort Lauderdale and/or West Palm Beach. Purchasing a pre-construction condominium is a high risk/high reward transaction. The sale and marketing of a condominium by a real estate developer is governed by Chapter 718, Florida Statutes as well ILSA which is a federal statute which governs the interstate sale of “pre-construction” real estate. Under Chapter 718, a real estate developer of 20 or more Condominium Units is required to provide prospective buyers with a prospectus which discloses the material aspects of the project.
Further, every purchaser of “pre-construction” condominium units has a fifteen (15) day right to rescind (i.e. to suitability of the project) the purchase contract for any reason by delivering written notice to the real estate developer. Another aspect of Chapter 718 allows real estate developers to use any deposit proceeds in excess of 10% of the purchase price for construction expenses. This provision of Chapter 718 is very favorable to real estate developers as real estate developers often “finance” their projects by requiring sizable deposits often in excess of fifty percent (50%) of the Purchase Price of the Condominium Unit.
This is very alarming as many projects during the most recent “real estate bubble” never were completed and many developers lost the projects to foreclosure or via bankruptcy. As such, it is very important that prospective purchasers conduct legal and financial review of the project. For more information, please contact the experienced real estate attorneys at The Wallace Law Group with convenient office locations in Boynton Beach, Sunrise, Aventura and Downtown Miami.