The construction industry is facing a crisis with an increasing number of bankruptcies. The most difficult situation for new home buyers is when the developer goes bankrupt during construction. In this case, the buyer may not get their money back and may be left without a new home.
When the developer of a new property goes bankrupt, it can take the project to completion. However, this does not happen in practice. According to legal experts, if the building is almost finished, bankruptcy could end the project. However, there are no guarantees that the buyer will get their money back if there is no money in the bankruptcy estate.
The only security for buyers in RS properties during construction is the security during the construction phase. At least 5% of the contract price must be provided at the beginning of construction and later at least 10% of the total amount of trading prices of shares sold must be provided. This security cannot complete the built object and Talon after completion, shareholders are protected by post-construction bonds in RS properties which are at least 2% of total trading prices of shares sold.
Construction defects can only be revealed years after a developer files for bankruptcy, and protection is a non-performance guarantee that compensates for repair costs of errors found after annual inspections up to 25% of construction costs. The guarantee is valid for nine years in practice and has deductibles that are error-specific. A buyer’s own auditor can also be useful as they have rights to see transactions in purchase price accounts and monitor payments made from them specifically aimed at constructing their apartment or house respectively.
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