---
id: "concept-florida-condo-deposit-financing"
type: "concept"
source_timestamps: ["00:02:15", "00:03:40"]
tags: ["financing", "leverage", "florida-law"]
related: ["concept-construction-bond", "claim-florida-roi-advantage"]
definition: "A legal mechanism in Florida allowing developers to use buyer deposits to fund construction costs, reducing required equity."
sources: ["jayroberts"]
sourceVaultSlug: "jay-roberts-florida-condo-development-2026Jun25"
originDay: 4
---
# Florida Condo Deposit Financing

## Florida Condo Deposit Financing

**Definition:** A legal mechanism in Florida allowing developers to use buyer deposits to fund construction costs, reducing required equity.

A unique legal framework in Florida that allows real estate developers to use a significant portion of a buyer's down payment (deposit) to directly fund the construction of the condominium. Unlike states like California or New York — where deposits must sit in escrow — Florida developers can access these funds by posting a surety bond (see [[concept-construction-bond]]).

### Worked Example (from [[entity-jay-roberts]])

- $3.5M condo with a 10% initial deposit = $350k
- Developer can bond 90% of that deposit
- Remaining **$315k** is freed to pay hard construction costs (see [[concept-hard-vs-soft-costs]])

This mechanism drastically reduces the amount of developer or investor equity required to get a project out of the ground, thereby significantly increasing the return on invested equity due to the higher leverage. See the direct ROI argument in [[claim-florida-roi-advantage]] and Roberts's own framing in [[quote-florida-deposit-advantage]].

### Legal & Regulatory Nuance (Enrichment)

The mechanism is anchored in **Florida Statute §718.202**, which requires up to 10% of the sale price to be held in escrow but allows deposits *in excess of 10%* to be used for construction if the contract permits. When initial 10% deposits are released for construction, the aggregate must be secured by a surety bond or irrevocable letter of credit. Permitted uses are limited to "actual costs incurred" in construction and development; marketing, loan fees, and attorney fees are excluded.

### Counter-Perspective

Florida's regime does not eliminate risk — it **reallocates** it. Buyers are protected by escrow and bond/LOC structures, while developers still face presale, execution, and completion risk. High leverage amplifies both upside and downside: if sales slow, costs spike, or permitting delays extend the timeline, the deal becomes more fragile. The video's comparison that California/NY developers "must fund all equity themselves" is also too broad — the special-deposit rules are uniquely Floridian, but capital-stack math elsewhere depends on many other factors.

Used by major Miami developers including the [[entity-related-group]] (Jorge Pérez, see [[entity-jorge-perez]]) and Roberts's own firm [[entity-prosper-group]].


## Related across days
- [[concept-construction-bond]]
- [[concept-cost-of-capital-arbitrage]]
- [[cross-financialization-arbitrage]]