Buyer of new apartment may not get home if developer goes bankrupt

Construction industry’s bankruptcy challenges for buyers and the need for better security arrangements

The construction industry has seen an increase in bankruptcy of companies of all sizes, leaving new home buyers at risk. When a developer goes bankrupt during the construction phase, it can cause significant financial and logistical challenges for buyers who have already purchased apartments or houses. In RS properties, security during the construction phase is only at least five percent of the contract price at the beginning and ten percent of the total amount of trading prices sold later on. However, there are concerns about the adequacy of this security.

In such situations, buyers should take proactive measures to minimize risks. This includes conducting thorough background checks on the construction company and hiring a construction observer to monitor progress and appropriateness of construction work. Additionally, legislation needs to be changed to improve protection for building societies and shareholders in case of bankruptcy situations. Legislative changes should include increasing collateral during and after the construction phase as well as clarifying provisions in non-performance bond deductibles.

Experts stress that better security arrangements and options for buyers are necessary to mitigate risks associated with bankruptcy during construction phases. Faster and more efficient processes for using collaterals when they are needed would also help protect buyers’ interests. Furthermore, legislative changes need to address who takes responsibility for construction projects when developers go bankrupt in the middle of a project.

In conclusion, while guarantees provide some level of protection for buyers during the construction phase, they may not be enough in certain situations. New home buyers must take proactive measures to minimize risks associated with potential bankruptcies by conducting thorough background checks on developers and hiring a construction observer to monitor progress. Additionally, legislative changes are necessary to improve protection for building societies and shareholders in case of bankruptcy situations.

Legislative changes could include increasing collateral during and after the construction phase as well as clarifying provisions in non-performance bond deductibles. Experts also stress that better security arrangements and options for buyers are necessary to mitigate risks associated with bankruptcy during construction phases.

Overall, while guarantees can provide some level of protection for buyers during the construction phase, they may not be enough in certain situations. Buyers must take proactive measures to minimize risks associated with potential bankruptcies by conducting thorough background checks on developers and hiring a construction observer to monitor progress.

Furthermore, legislative changes are necessary to improve protection for building societies and shareholders in case of bankruptcy situations. These changes could include increasing collateral during and after the construction phase as well as clarifying provisions in non-performance bond deductibles.

Lastly, faster and more efficient processes for using collaterals when they are needed would also help protect buyers’ interests while addressing who takes responsibility for construction projects when developers go bankrupt in the middle of a project is crucial legislation change that needs attention from lawmakers today.

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