Projects do fail. The question is not whether it happens but what your contract says when it does, and most buyers read that clause for the first time afterwards.
This page covers the outcomes. The contract terms for a specific building come from the desk. Contact the desk at Miami Dossier for the current position on any building we cover.
The developer cancels. A clean outcome. Most contracts provide for return of deposits if the developer terminates the project, and escrowed funds are returned. You lose time and opportunity, not principal.
The project stalls indefinitely. Much worse than cancellation. Nobody has terminated anything, so there may be no trigger for a refund, and your money sits while the outside delivery date is extended.
The developer fails financially. Escrowed deposits are protected, but the portion lawfully released for construction is a claim against an insolvent party rather than a segregated fund.
The middle case is the one people do not plan for and the one that most often occurs.
Florida law requires that a preconstruction contract state an outside date by which the developer must complete construction, and gives a buyer a remedy if the developer does not meet it.
Contracts routinely contain extension provisions. Force majeure, permitting delay, supply and labour disruption. Each extension is legitimate and each pushes the date on which your remedy becomes available.
Ask what the stated outside date is, what circumstances extend it, and whether there is a ceiling on cumulative extension. The presence or absence of that ceiling is the single most useful thing in the clause.
The 2008 cycle left a number of Miami projects unbuilt or half-built. Buyers with properly escrowed deposits and clear contract terms largely recovered. Buyers who had waived protections, or whose funds had been released, did considerably worse.
The pattern repeats: outcomes track the contract and the escrow arrangement much more than they track the developer’s reputation at the time of signing.
Reputation is a real signal and it is not a guarantee. Established developers have failed on individual projects while continuing to operate.
Read the outside date and its extension provisions before you sign, not when the date passes.
Understand what proportion of your deposit can lawfully be released for construction, because that is the portion genuinely at risk.
Weigh the developer’s delivery record, not the brand on the building. The operator who has delivered five towers in this market is a different proposition from a first project with a licensed name attached.
Ask whether construction financing is in place. A funded project is far less dependent on your deposit continuing to arrive.
Cancellation returns your money. Indefinite delay does not, and that is the more common outcome. Ask the desk at Miami Dossier for the delivery record and the contract terms.
We hold no inventory of our own and we are not the developer. Ask the desk at Miami Dossier and we will tell you what applies to your situation, what does not, and where we would not proceed. Here that starts with the outside date, the extension ceiling and the delivery record. Where the question is legal, tax or immigration, we will introduce you to advisers who handle that properly rather than answering it ourselves.