The Pitfalls of Paying Purchase Funds Directly to Developers


Ava Naraghi Head ShotBuilding a condominium development is a massive financial undertaking. Any sudden fluctuations in the developer's liquidity may adversely impact any number of parties with a stake in the development project. In an attempt to improve liquidity and fund the ongoing construction, some developers resort to asking purchasers to pay some or all of the purchase funds to the developer directly. Ordinarily, such funds would be paid by the purchaser into a trust account set up for the benefit of secured creditors, such as first mortgagees.

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