Does a builder have to hold my deposit in escrow on new construction?
The short answer
Whether a builder must hold buyer deposits in escrow depends on state law and what the contract says. Florida Statute §501.1375 reports that for one- and two-family residential dwelling units, building contractors and developers are generally required to place buyer deposits (up to 10% of the purchase price) in an escrow account — unless the buyer waives that right in writing. The statute further reports that the contract must contain a conspicuous notice of the buyer's right to have the deposit escrowed and that this right may be waived. The waiver provision means the contract itself is a live contract-review issue: whether escrow protection exists or was waived is a clause to find and read before signing. Rules vary by state; Florida's statute is one reported example. Scan your builder contract to see whether the deposit is being held in escrow and whether a written waiver was included.
What Dang reviews here: Dang reviews the contractual terms of your purchase agreement — contingencies, deadlines, fees, and disclosure-related clauses. It does not verify the physical condition of the property or detect hidden defects; a professional inspection does that.
Jurisdiction focus: FL — rules differ in other states.
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What Florida's escrow rule reports for new construction deposits
Florida Statute §501.1375 reports that building contractors and developers selling one- and two-family residential dwelling units must generally notify buyers that deposits up to 10% of the purchase price will be held in escrow — and that this right may be waived in writing by the buyer. When not waived, the funds are held by an escrow holder (a bank, attorney, licensed broker, or title company) and generally require both parties' signatures to be released except in defined circumstances.
The statute also describes an alternative: the builder may use a surety bond instead of an escrow account for construction purposes, after notifying the buyer. Whether the deposit is in escrow, covered by a bond, or waived entirely is a practical distinction that affects what protects the buyer's money if the builder defaults or cannot complete the home.
Why people worry
New construction deposits can be substantial — often 5–10% of the purchase price, paid months or years before delivery. If the builder encounters financial trouble, the escrow arrangement (or its absence) determines whether the buyer's deposit is recoverable. Buyers sometimes sign a waiver without understanding that it removes the escrow protection, leaving the deposit commingled with the builder's operating funds.
What to look for in your contract
- Whether the contract includes the required notice of the buyer's right to have the deposit escrowed (for Florida transactions).
- Whether a written escrow waiver appears in the contract — and whether you have signed it.
- If no waiver: the name of the escrow holder and the account details.
- Whether the builder is using a surety bond as an alternative to escrow — and what bond amount covers.
- The deposit release conditions — what triggers disbursement to the builder during construction.
Questions to ask before signing
- Ask the builder to confirm in writing whether the deposit will be held in escrow and by whom.
- Ask the other party to clarify whether a written escrow waiver is included and what it means for deposit protection.
- Confirm the deposit release process — when does the builder receive the funds during construction.
- Consider having the contract reviewed to understand the escrow or bond arrangement before signing.
Why scan instead of guess
The general rule tells you the baseline. Your contract tells you what you’re actually being asked to sign — and the wording is what binds. Dang reads the document and flags the clauses worth reviewing, in plain English.
The deterministic engine scores and decides what’s risky. The AI only enriches the plain-English wording — AI extracts, code decides, never the other way around.
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Common questions
Does Florida's escrow rule apply to condo purchases too?
Florida §501.1375 applies specifically to one- and two-family residential dwelling units as defined in the statute. Condominium deposits in Florida are governed by a separate chapter of Florida law. The contract type and property type determine which rules apply.
If I sign a waiver, is my deposit unprotected?
Under Florida's statute, a written waiver removes the escrow requirement for the waived amount. The deposit would then generally be held by the builder directly, not in a third-party escrow. What other contractual protections exist — forfeiture conditions, return events — is in the contract.
Do other states have similar escrow rules for new construction deposits?
Several states have enacted deposit-protection rules for new construction, though the specifics — scope, amounts, waiver rights — vary. Florida's §501.1375 is one reported example. Your state's rules and your contract's specific terms are both relevant.
Sources
- Florida Statute §501.1375 — Deposits received for purchase of residential dwelling units; placement in escrow; waiver; exceptions (official statute text, Florida Legislature) · official source
- Sources last checked 2026-06-11. Laws and market practices change — confirm current rules before relying on them.
No account required · File deleted after analysis · Not legal advice. Dang reports contract findings in plain English — general information, not legal advice about your situation. For consequential decisions, consult a licensed attorney in your state.