New towers and boutique buildings on the coast often sell units before they’re finished. Buying pre-construction can mean choosing your floor and finishes, but it works differently from a resale. Florida law gives buyers of new condos specific protections. Here is how they work.
Key takeaways
- When buying from a developer, Florida law lets you cancel within 15 days after signing or receiving the required documents, whichever is later.
- Deposits must be held in escrow, and the contract must explain if any part can be used for construction.
- Read the prospectus closely for estimated budgets, rental rules and completion terms.
- Plan financing carefully. Lenders review new projects too, and closing may be months or years away.
Your 15-day review period
Under section 718.503 of the Florida Statutes, a contract to buy a new residential condo unit from the developer is voidable by the buyer within 15 days after signing it or receiving all required documents, whichever is later. Use that time to read everything, not just the floor plan.
What to read in the developer’s documents
| Document | Look for |
|---|---|
| Prospectus or offering circular | What’s being built, amenities and any developer rights |
| Estimated operating budget | Projected dues and reserves |
| Declaration and rules | Rental minimums, pets, use restrictions |
| Purchase agreement | Deposit schedule, completion dates and what happens if they slip |
| Plans and specifications | Finishes included and allowed changes |
How deposits are protected
Section 718.202 requires developer deposits to be held in escrow. If the contract allows it, deposits above a set share of the price can be released for construction costs, which means more of your money is at risk if the project stalls. The contract has to disclose this clearly, so look for that language and ask questions.
Watch out: Check how the contract handles delays. Know the outside completion date and your rights if it passes.
Practical questions to ask
- Has the developer completed buildings like this before?
- Are permits issued, and has construction started?
- What are the estimated dues, and when do they start?
- Will the building allow the rental use you want?
- Which lenders are financing units in the project?
Our tip: Prices on new units are set by the developer. To compare, look at recorded sales in nearby newer buildings. Our resales by year built analysis shows how newer buildings sold.
What this means for you
Pre-construction can work well for patient buyers who read the fine print. Have a Florida real estate attorney review the contract, and see our condo buyer’s guide and short-term rental rules before you commit.
Please note: Laws, tax rules and insurance terms change, so check the details for your situation with a licensed professional, such as a Florida real estate attorney, insurance agent or tax adviser, before you act.
Comparing a new building with resales? Contact us.
Sources
- Florida Statutes, section 718.503, developer disclosure and 15-day cancellation.
- Florida Statutes, section 718.202, sales and reservation deposits held in escrow.
- Florida DBPR, Division of Condominiums, Timeshares, and Mobile Homes.