Staff Writer March 30, 2009
In some developments across the country, potential homeowners are facing losing hundreds of thousands of dollars made in deposit payments to developers in light in the recent credit crisis. According to many of their stories, these individuals put down deposits of around ten percent to developers, which as standard practice required them to sign no-contingent deposit agreements before accepting their money. In many cases, these homeowners had already lined up the remaining financing to purchase the home, however, amidst the credit crisis; banks began requiring much larger down payments on mortgage loans than the traditional ten percent. In a handful of cases, prospective homeowners could not afford these terms, and in turn, were forced to back out of agreements with developers. The developers, in response, had the legal right to retain their initial deposit amount, which in many cases they did. In areas of high density, high priced real estate, such as New York and New Jersey, these deposit amounts regularly exceed one hundred thousand dollars, leaving many prospective homeowners without money that took them decades to save.
Though many of these individuals had made fiscally sound decisions their entire lives, including having impeccable credit ratings, the bank’s heightened requirements for obtaining mortgages amidst the credit crisis forced homeowners away from the homes of their dreams. Many of these individuals were seemingly victims of circumstance and the downtrend economy. In some cases, developers have offered partial repayment of the deposit amount, with figures being noted at around twenty percent, but by and large, developers have retained the entire deposit amount, as they more or less had the legal right to do so. In some instances, homeowners are suing these developers to return their deposit amounts after failing to persuade the developer to do so in any other manner. Across the real estate development industry, virtually every company involved in real estate development has run across one or more potential homeowners facing this crisis, according to industry experts. No real solution for homeowner deposit losses or protection is currently in affect either, and industry experts expect this problem to face an increasing number of potential homeowners over the next year.
