AdamS
Active Member
Blog TO
So without any hyperbole or scare tactics, what's the worst that could happen to the folks who have bought pre-construction in a worse case scenario?
Like would people actually LOSE their deposits, or is worse case you get your deposit given back to you and told if you want what you thought your purchased it's now going to cost way more.
Lots of Sky is Falling going on with articles like this, but what's the worst case scenario for buyers who have a deposit down waiting to move in.
It would depend on a few factors.
The worst case scenario is really a half built development, because a half built condo is not worth anything. In a receivership or bankruptcy, the secured lenders are always ahead of you (the buyer). So you can hope a new developer can come in and finish the job but there's no guarantee and your deposit is in limbo.
If the development hasn't started, you will almost always get your money back without interest.
The problem today is that many condos are nearing completion and the investor-buyers are unable to secure mortgages due to the values being slashed in appraisal. So they either need to inject more cash into the deal to bring down the Loan To Value ratio, or they can try to beg someone to buy their paper and lose their deposit. If they walk away and fail to close, they should consult a lawyer because they will definitely need one.