Alternative Financing for Condo & Homebuilding Projects
A BRIEFING ON BUYERS’ DEPOSIT BOND PROGRAMS
THE CONCEPT
A Deposit Bond guarantees your home buyers’ down payment money for the construction of new homes/condominium. The bond runs directly to your escrow agent who is responsible for monitoring your escrow account(s). Our program is flexible in that it allows us to provide one (1) Deposit Bond for all of your escrowed money or for each of your projects, whichever is most beneficial for your operation.
THE BENEFITS
Given the many pressures regarding escrowing home deposits, utilizing a Deposit Bond can allow a builder to access their home buyers’ deposit money for construction. The program is very simple and the most effective way to generate instant working capital for your operations. Bottom line, it will allow you to use your buyers’ deposit money for construction without jeopardizing the home sale by causing an adversarial relationship between you and your buyer. The Deposit Bond will cost you much less than using your construction loan and allow you to utilize your escrow money rather than diminish your cash flow.
WHEN TO USE DEPOSIT BONDS
Anywhere laws mandate that you hold home deposits in escrow until closing (i.e. Townhouse & Condominium projects, custom home building, single family home construction or any residential construction in the State of Florida, new legislation in Alabama permitting the use of this product). As you can see, the advantage of utilizing Deposit Bonds is far reaching.
GUARANTEE PERIOD
The guarantee period for a Deposit Bond is one (1) year. After one (1) year, the bond can be renewed annually at the original rate.
REQUIRED UNDERWRITING INFORMATION
Past three (3) fiscal year-end financial statements (prepared by an external CPA). If not available, then the most recent financial statement will often times be sufficient
Project overview & current sales report
Copy of your escrow agreement & contract of sale
Detailed Ownership Structure
Project specific Sources & Uses
RATING
Our Deposit Bond program offers builders and developers a very flexible and competitive rating structure. When compared to the costs associated with using your own money or utilizing a construction loan, our rate is significantly less.
Gain access to a Deposit Bond facility through Ivy Risk with the flexibility to meet all laws mandating home/ condominium deposits being held in escrow until closing.