How does pre-construction escrow work in Florida (Section 718)?

Section 718 of the Florida Statutes, the Florida Condominium Act, is the most important law you'll never read but absolutely should understand before signing a pre-construction contract. It dictates how your deposit is held, who can touch it, and when.

The three deposit tiers

1. First 10% (up to 10% of purchase price), must be held in a Florida escrow account by an attorney or title company. Developer CANNOT touch these funds until closing.
2. Next 10% (between 10% and 20%), can be released to the developer for construction, but only with specific statutory disclosures and sometimes a surety bond.
3. Above 20%, fully usable by the developer for project costs.

What protects you

• Escrow agent must be independent, typically a Florida-licensed attorney or title company.
• Quarterly accounting requirements on escrowed funds.
• If the developer defaults, escrowed funds are returned to buyers (15-day disclosure window for material changes).
• Right to rescind: 15 days from signing or receipt of all condominium documents (whichever is later).

Practical buyer checklist

• Confirm escrow agent name and Florida bar number in the SPA.
• Verify the escrow agent is independent of the developer, not the developer's in-house counsel.
• Read the condominium documents within the 15-day rescission window.
• Get written confirmation each time a deposit is moved between tiers.

“Section 718 is your safety net. Buyers who understand it sleep through the construction phase. Buyers who don't, don't.”