How pre-construction condo deposits work in Florida
The first 10 percent is protected and the rest is a contract decision
- Held in escrow until closing
- 10%
- Held in escrow until closing
- Florida statute governing condo deposits
- Section 718.202
- Florida statute governing condo deposits
- Typical Palm Beach deposits before closing
- 20% to 50%
- Typical Palm Beach deposits before closing
- Common share paid at closing
- 60%
- Common share paid at closing
Florida's condominium law protects the first 10 percent of the purchase price absolutely: it goes to a licensed escrow agent and stays untouched until closing. The developer can draw every dollar above that for construction once work begins, but only if the contract says so in a bold legend on the first page and above the buyer's signature. Palm Beach towers typically collect 20 to 50 percent before closing, in installments tied to contract, groundbreaking and topping out.
The short answer
- Section 718.202 requires every payment up to 10 percent of the price to stay in escrow until closing.
- Deposits above 10 percent may pay for construction only if the contract carries the statutory legend.
- Developers may not spend deposits on commissions, advertising, loan costs or legal fees.
- A developer that breaks the escrow rules lets the buyer void the contract and recover the deposits with interest.
- Typical Palm Beach schedules collect 10 percent at contract and 10 percent at each of three construction milestones, with about 60 percent at closing.
The statute holds the first 10 percent in escrow
Section 718.202 of the Florida Statutes governs every deposit on a residence sold before the building is substantially complete. All payments up to 10 percent of the price go into an escrow account with a licensed escrow agent, who must give the buyer a receipt on request. Payments above 10 percent go into a second, special escrow account.
The developer may draw on that second account only when construction has begun and only if the contract provides for it. Even then the money pays only actual costs: demolition, site clearing, permit and impact fees, architectural, engineering and surveying fees, and construction itself.
The law also lists what the money may not fund: sales commissions, advertising, loan costs, legal and accounting fees, and insurance. It attaches a penalty as well. If the developer fails to comply, the contract is voidable by the buyer, and all deposits come back with interest at the highest savings rate then paid.
The legend on the first page decides the rest
A contract that lets the developer use deposits above 10 percent must say so in conspicuous type, on the first page and immediately above the buyer's signature. The statute prescribes the words: any payment in excess of 10 percent of the purchase price made to developer prior to closing pursuant to this contract may be used for construction purposes by the developer.
Without the legend, every dollar deposited stays in escrow until closing. Most sophisticated Palm Beach developer contracts include it. Its presence is no red flag: it is the mechanism by which a $600 million tower gets built. Its absence simply gives the buyer more protection.
Most schedules leave 60 percent for closing
Schedules vary by building and by release, and none of the current West Palm developers publish theirs online. The structures brokers report follow the same shape.
The Banyan Tree Residences schedule reported in May 2026 was 10 percent at hard contract, 10 percent at 90 days, 10 percent at groundbreaking, 10 percent at top-off and 60 percent at closing. A brokerage-reported Mandarin Oriental schedule takes 10 percent at reservation, contract, groundbreaking and the 15th floor, then 60 percent at closing. Neither developer has confirmed its schedule; ask for it in the purchase agreement.
Settle the escrow terms before the first wire
- Who is the escrow agent, and will the buyer receive a receipt for each deposit?
- Does the contract carry the 718.202 legend that allows use of deposits above 10 percent?
- Which events trigger each installment, and who certifies that groundbreaking or top-off has occurred?
- What is the outside completion date, and what happens to the deposits if it passes?
- Is interest on escrowed deposits paid to the buyer, to the developer or to the escrow agent?
- Does the lender's construction loan carry a presale covenant, and has it been met?
General information, not legal or tax advice. Statutes change and the sources are dated. For every new tower with its figures and floor plans, open the index.
Questions this article answers
How do pre-construction condo deposits work in Florida?
The first 10 percent of the purchase price goes to a licensed escrow agent and stays in escrow until closing. Payments above 10 percent go into a second, special escrow account. They can fund construction once work begins, but only if the contract says so.
What Florida statute governs condo deposits before closing?
Section 718.202 of the Florida Statutes governs every deposit on a residence sold before the building is substantially complete. It sets the 10 percent escrow rule, limits what larger deposits may pay for and gives the buyer a remedy if the developer fails to comply.
Can a Florida condo developer use a buyer's deposit to pay for construction?
Only the portion above 10 percent, and only once construction has begun and the contract provides for it. The money may go to actual costs: demolition, site clearing, permit and impact fees, architectural, engineering and surveying fees, and construction itself.
What are Florida condo developers not allowed to spend buyer deposits on?
Section 718.202 bars developers from spending deposits on sales commissions, advertising, loan costs, legal and accounting fees or insurance. Withdrawals from the special escrow account are limited to the actual costs of construction.
What does the deposit legend in a Florida condo contract say?
It reads: any payment in excess of 10 percent of the purchase price made to developer prior to closing pursuant to this contract may be used for construction purposes by the developer. It must appear in conspicuous type on the first page and immediately above the buyer's signature.
What happens if a Florida condo contract does not have the deposit legend?
Then every dollar deposited must stay in escrow until closing. Most Palm Beach developer contracts include the legend, and its presence is no red flag. Its absence simply gives the buyer more protection.
What can a buyer do if a Florida condo developer breaks the escrow rules?
The buyer can void the contract. Under section 718.202, a developer's failure to comply makes the contract voidable by the buyer, and all deposits come back with interest at the highest savings rate then paid.
What is a typical deposit schedule for a Palm Beach pre-construction condo?
A common shape is 10 percent at reservation or contract, 10 percent 90 days later or at groundbreaking, 10 percent at vertical start, 10 percent at topping out and 60 percent at closing. Schedules vary by building and release, so ask for the schedule in the purchase agreement.
What should a buyer ask before wiring a deposit on a new Florida condo?
Ask who the escrow agent is, whether each deposit comes with a receipt and whether the contract carries the 718.202 legend. Then ask what triggers each installment and who certifies it, the outside completion date, who receives escrow interest and whether the lender's presale covenant has been met.
SourcesShow
- Section 718.202, Florida Statutes: Sales or reservation deposits prior to closingFlorida Legislature · 2026
- Miami pre-construction deposit structureMillion Luxury · November 25, 2025
- West Palm Beach Luxury Condo Tracker: August 2026Haute Residence · August 18, 2026
