Developer for property went bust

samburden · 10 August 2023 at 12:19PM

Hello All
I was in the process of buying an off plan property and the developer has gone bust. Anyone been in the same boat and been able to recover their deposit?
Thanks for your help

jlfrs01 · 10 August 2023 at 12:32PM

If the developer has contracted with a housing warranty provider, they usually have a deposit guarantee so start there. If not, then probably best to find out which company has been appointed to deal with debtors and get your name added to the list. It's usually bigger trade debtors or banks and lenders who are first in line before Joe Public to get a share of any assets, assuming there are some.

eddddy · 10 August 2023 at 3:52PM

samburden said:

Hello All
I was in the process of buying an off plan property and the developer has gone bust. Anyone been in the same boat and been able to recover their deposit?
Thanks for your help

Was this...

a 'conventional' off-plan purchase where the developer arranges their own finance for building the properties - and you exchange contracts with a 10% deposit, and a mainstream warranty provider is involved?

or was it something like a "buyer funded development", where the developer uses deposits/payments from buyers to pay for building the properties?

If the word "investment" was used anywhere in the marketing info, it's almost certainly a "buyer funded development" - and unfortunately, they are often high risk. So...

If it's a "conventional" off-plan purchase - your deposit may be protected.

If it's a "buyer funded development" your deposit won't be protected. (In theory, when the administrators sell all the assets, there might be some money left to partially pay back your deposit - but that's probably wishful thinking.)

Do you have a link to any info about the development?