How Pre-Construction Deposits Work in South Florida

The pre-construction deposit structure is one of the most misunderstood elements of buying a luxury new development in South Florida — and one of the most important to understand before signing a purchase contract. This guide explains how deposits work, what protections buyers have under Florida law, how the structure differs across projects, and what international buyers in particular should plan for.

The Basic Structure

South Florida luxury pre-construction projects typically require total deposits of 30 to 50 percent of the purchase price before closing. These deposits are not paid in a single payment at contract signing — they are staged across construction milestones over the two to four years between contract and closing.

A common structure for a $5M luxury branded residence might look like this:

• $500,000 (10 percent) at contract signing.
• $500,000 (10 percent) at groundbreaking or a specified early construction milestone.
• $500,000 (10 percent) at building top-off.
• $500,000 (10 percent) at a specified pre-completion milestone, if applicable.
• $3,000,000 (60 percent, the balance) at closing.

Some projects compress this into three stages; others add a fourth or fifth. Some require a larger first deposit — 20 or 30 percent — with smaller subsequent payments. The specific schedule is in the purchase contract and varies by project, developer, and unit tier.

Florida’s Escrow Protections

Under Florida’s Condominium Act (Chapter 718), all pre-construction deposits must be held in an escrow account by a licensed escrow agent — typically a title company or Florida-licensed attorney. The developer cannot access these funds until specified conditions are met. If the developer fails to deliver the building or is unable to proceed, the escrowed deposits must be returned to buyers.

This protection is meaningful and distinguishes Florida from some other states and jurisdictions where deposit protection is weaker. However, escrow protection does not mean zero risk. A developer who encounters severe financial difficulty may pursue legal mechanisms to access escrowed funds, and the return of deposits through legal proceedings can be slow. Reviewing the specific escrow terms in your purchase contract is essential.

Why International Buyers Prefer This Structure

The staged deposit model has a specific appeal for international buyers, particularly from Latin America, that goes beyond simple purchase logistics. It allows buyers to move capital into a dollar-denominated U.S. asset incrementally over time — useful in countries with currency instability or informal capital controls.

For a Colombian or Argentine buyer planning a Miami purchase, the ability to wire 10 percent at contract signing, then 10 percent 12 months later at groundbreaking, then 10 percent 24 months later at top-off, is a financial planning advantage. They are not required to have the full purchase price immediately available. They are locking in a price and an asset while deploying capital at a pace that works with their home-country financial situation.

This is a structural feature of the Miami pre-construction market that actively attracts international capital. It is not an accident — it is why developers designed the model this way.

What the Deposit Buys You

Your deposit secures a specific unit at a contracted price. In most luxury new development projects, early buyers who deposit before significant construction progress pay prices that are lower than what will be offered later in the sales cycle. The deposit structure rewards early commitment with pricing advantage.

This is not guaranteed appreciation — delivery values depend on market conditions at the time the building delivers, which may be two to four years after your contract date. But in South Florida’s sustained luxury new development market, buyers who purchased at contract in projects like Cipriani, St. Regis Brickell, and Mandarin Oriental Miami have generally seen appreciation between their contract price and what comparable units were trading for by delivery.

What to Verify Before Signing

Before committing to a pre-construction purchase, verify the following about the deposit structure: the exact escrow agent holding the deposits and the terms of the escrow agreement; what happens to your deposits if the developer is more than a specified period past the delivery date; whether deposits earn interest during the escrow period; what constitutes a material change that would give you the right to rescind; and the specific conditions under which the developer can access escrowed funds before closing.

Have a Florida real estate attorney review the purchase contract and escrow terms before signing. This is the most important document in a pre-construction purchase.

HL Real Estate Group can provide current deposit schedules for all active South Florida new development projects. Contact realestate@hauteleaders.com or call 786.957.7868.

This article is editorial in nature and does not constitute legal advice. Buyers should engage a qualified Florida real estate attorney before signing any pre-construction purchase contract.