"Drop-Dead" Closing Dates:
Every developer contract should be modified to include a "drop-dead" date, meaning a date by which the project has to be completed and title conveyed to the purchaser. If the dwelling is not completed by that date, the purchaser should reserve the right to terminate the contract at his or her sole discretion, and all earnest money, plus deposits for upgrades should be refunded. A recent developer contract that we reviewed simply set forth an estimated closing date. Further along in the contract it stated that the closing date could be extended by the developer, for up to two years beyond the estimated date, "due to strikes, labor shortages, availability of materials, adverse weather conditions, Acts of God, or other matters beyond the reasonable control of the developer." If left unmodified, this clause could have potentially bound the purchaser to the contract for a lengthy period of time.

Real Estate Taxes Prorations:
As real estate taxes are paid a year in arrears, it is important to ensure the real estate tax credit you receive from the developer at closing is fair. Some condominium contracts provide that the real estate tax credit is based on the amount of the last tax bill for the property. If the property was unimproved at the time of the last assessment, this amount could be very low. The new tax bill, based on the property as improved with a condominium building, would obviously be much larger.

Material Changes:
Many developer contracts contain language that allows the developer to make changes to the types of building materials that it may use when constructing the premises. It is important to add language to the contract that states the developer may only make changes to construction materials provided the substituted materials are of like-kind quality or grade and that the replacement materials to be used will not negatively affect the value of premises.

Pre-Closing Inspections:
Every developer contract should provide an opportunity for the purchaser to inspect the building prior to closing. It is a good idea to have a representative of the developer with you during the inspection so that both parties can agree on what items need correction. If possible, the contract should require the items be corrected before the closing, or a least within a definite period after the closing, such as 30 days. A provision could also be inserted into the contract that states if corrective work is more extensive, a specified sum is held back from the sale proceeds.

Purchaser's Remedies if Seller Defaults:
Many developer contracts contain language that a purchaser's only remedy in the event of a developer's default prior to closing is a return of earnest money. The purchaser should retain all legal remedies available to them in the event the developer breaches the contract, including the right to sue for monetary damages.