Pre-Construction in South Florida: Pros, Cons and Smart Moves

Buying pre-construction means signing a contract for a home that has not been built yet. In a condo tower, delivery can be years away. In a single-family community, a home built to order usually takes months. Either way, you are buying from floor plans, a model and a contract, not from a finished house. Done well, it is one of the best ways to buy in South Florida. Done carelessly, it ties up a lot of money for a long time. Here is how to tell the difference.

Why buyers buy early

• Early pricing. Developers often raise prices as a project sells. The first buyers usually get the lowest prices.
• First choice. You pick the unit, floor, view, plan or homesite before anyone else.
• Payments spread over time. Condo deposits are usually paid in stages during construction instead of all at once.
• Everything new. New systems, current building codes and no backlog of repairs in the early years.
• Your finishes. You choose them, so you don't pay to replace someone else's.
• Possible appreciation. The value may rise while the building goes up. That is possible, not promised.

The trade-offs

• Money tied up for years. In luxury condo towers, total deposits often run from 20% to 50% of the price. They are typically paid as 10% at contract, 10% at groundbreaking, and the rest at construction milestones. That money is locked up until closing.
• Delays. Completion dates move. Read what your contract says about deadlines and what happens if they are missed.
• The market can change. You agreed on the price when you signed. If values drop before delivery, you still owe that price, and the appraisal may come in lower than what you owe.
• Financing comes later. Most buyers get their mortgage near completion, so you qualify under the lending rules and rates in effect then, not the ones in effect when you signed.
• You buy from drawings. Contracts usually let the developer substitute materials of similar quality. Know what you are agreeing to.
• Higher closing costs. On new construction, the buyer often pays costs a resale seller would normally cover, such as the documentary stamp tax on the deed and a working capital contribution to the association, often one to three months of dues. Budget for this from the start.

Your protections under Florida law

For condominiums, Chapter 718 of the Florida Statutes gives buyers real protections:

• Reservation deposits go into escrow and must be refunded in full when you ask in writing.
• The first 10% of the price must be held by an escrow agent. Money above that goes into a special escrow account. The developer can use it for construction only under conditions the contract must spell out, so read that clause.
• A 15-day right to cancel. You can cancel the contract within 15 days after receiving all the required condo documents.
• The documents themselves. You receive the declaration, the estimated operating budget and the floor plans. Read the budget closely: it is your first look at what ownership will cost each month.

These protections are strong, but they don't replace a contract review. Have a Florida real estate attorney read the purchase agreement before your 15 days run out.

Best practices

1. Bring your agent on your first visit. Developers and builders usually register a buyer's agent only at the first visit. If you go alone, you are working with the developer's sales team, who represent the developer. Your agent is typically paid by the developer, not by you.
2. See it in person. Visit the sales center and the site, and look at buildings the same developer has already finished.
3. Know where your deposit goes. Ask how much stays in escrow and when money above 10% can be released. In a slower market, deposit schedules are often negotiable, so ask.
4. Plan for the full price, not just the deposits. Get pre-approved early and keep your finances steady until closing.
5. Read the contract terms that matter. Check the completion deadline, your remedies if it is missed, the rules on material substitutions, and whether you are allowed to sell your contract before closing.
6. Budget the real closing costs. Ask for an estimate of the buyer-paid items at the start, not the week before closing.
7. Stay informed during construction. Work with an agent who tracks the project's milestones and keeps you updated until you get the keys.

Single-family homes: the shorter version

Buying a home built to order in a single-family community follows the same logic on a shorter timeline. At Lotus Edge in West Boca, for example, a home built to order typically takes 8 to 12 months, and decorated models and quick move-in homes are available for buyers who can't wait. The condo statute above covers condominiums, so read the deposit section of a single-family builder contract on its own terms.

My Lotus Edge community page gives an overview of one builder community that is selling now. If you are comparing builder offers, read my guide to new construction incentives.

Quick answers

What does buying pre-construction mean?

Signing a contract for a home before it is built. In a condo tower, delivery can be years away. In a single-family community, a home built to order usually takes months.

How much deposit does a pre-construction condo in South Florida require?

In luxury condo towers, total deposits often run from 20% to 50% of the price, paid in stages: typically 10% at contract, 10% at groundbreaking, and the rest at construction milestones.

Are pre-construction condo deposits protected in Florida?

Yes. Under Chapter 718 of the Florida Statutes, the first 10% of the price must be held by an escrow agent. Money above that goes into a special escrow account and can be used for construction only under conditions the contract spells out. Reservation deposits are refundable in full on written request.

Can I cancel a pre-construction condo contract in Florida?

Yes, within 15 days after you receive all the required condo documents. Have an attorney review the contract before that window closes.

Thinking about a pre-construction purchase in Palm Beach or Broward County? Contact me before your first visit to the sales center, and we will go through the contract and the numbers together.