Condominium Escrow Deposit Bonds—Helping Developers Secure Access to Project Escrow Funds

Secure access to your condo project’s escrow funds with a Condominium Escrow Deposit Bond designed to support your development goals

Condominium escrow deposit bonds

Developers who sell and build residential condominiums will often attempt to pre-sell a percentage of a building prior to beginning construction. Each unit buyer (contract purchaser) will usually place a deposit with the developer’s escrow agent to be held in trust until it is applied at closing. Under defined circumstances in the contract, all or part of the deposit may be refundable before the closing.

Many states have established consumer protection laws or administrative directives to protect the interests of the contract purchaser so that the deposit is kept in trust. In several states, a developer may have access to the funds in escrow if the developer provides a letter of credit or a condominium escrow deposit bond payable to either the contract purchaser, the escrow agent,/or the state. In the event of a contractual default on the part of the developer, the purpose of the bond is to provide the funds to make the contract purchaser “whole” again.