"Basic Overview of Pre-Construction Condominium Purchases"

Buying properties at the pre-construction stage can provide a base of equity in the property and offers the buyer many choices from the early aspects of location and floor plan to the interior features. The Pre-Construction process can become complicated, so ask lots of questions and find out exactly what you are purchasing, at closing its to late to say "I didn't know that." Following is a basic vocabulary and sequencing of the pre-construction.

Reservation Agreement

Initially properties are offered under a Reservation Agreement. At this stage a developer will provide preliminary site plans, floor plans, basic amenities and initial price offerings. A prospective buyer reviews the information, selects a unit based on the proposed information and Reserves a specific unit by placing a deposit. The deposit is generally in an amount of ten thousand dollars ($10,000.) and is placed in an interest-bearing Escrow account. This unit is now under Reservation for this buyer. The Reservation Agreement is a non-binding agreement and the buyer can at any time and for any reason rescind the Reservation Agreement and receive their deposit money along with any applicable interest.

Condominium Documents

These documents include the project name, physical address, property and unit descriptions, exterior and interior materials, floor plans, lay-out, mechanical and electrical systems, appliances, and all standard features in the units. In addition, information regarding parking, amenities, the association rules and proposed management fees. It is very important to review each page of the Condominium Document because as a buyer you are agreeing with all aspects of this property. A quick overview of the condominium's covenants and restrictions can be read in the addendum titled "Frequently Asked Questions".

The buyers have 15 days known as "The Right of Recision" to review the documents and change their mind regarding the purchase of this unit.

Hard Contract-Sales Contract

Each buyer then proceeds to "Hard Contract". Hard contract is a binding Sales Contract and reveals that each party is in agreement of the entire project and the buyer will purchase the agreed upon unit. At this time, the buyer adds additional funds to their deposit to equal 20% of the purchase price.

Construction

Prior to releasing a project at Reservation Stage a developer establishes a relationship for the funding of the project. The loan is based on a pre-established minimum number of units being secured with Sales Contracts with 20% in Escrow Account. When that minimum amount is met, the construction loan is available and ground breaking is scheduled. Construction completion times vary greatly and a specific time frame for an individual project can be found in the Condominium Documents.

Closing

A Certificate of Occupancy, a "CO", is provided to the buyer for deed and title to be made available and the closing can then be completed. The Buyer and/or his-her representative will complete a walk-through their unit and develop a punch list of last minute minor touch-ups needed.

Oral representation cannot be relied upon as correctly stating representations of the developer. For correct representations, make reference to the brochure and documents required by section 718.503, FL Statues, to be furnished by a developer to a buyer.

We hope you enjoy this FREE real estate report. Please contact us if you need additional information about buying or selling property in or near Destin, Florida.

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