Questions developers, brokers and solicitors ask

A bond issued by a specialist insurer for the benefit of the purchasers on a development. It lets the developer use off-plan deposits during construction instead of leaving them held until completion, while the bond protects each buyer.

Section 1 is the pre-completion deposit protection section of some new-home warranties, arranged alongside the structural cover. It supports an early release of deposits only where the warranty provider expressly agrees, on limits and a duration the provider sets. A deposit release bond is a standalone bond that works alongside most reputable warranty providers, with a term set to the build programme. Where both are possible we set them out side by side.

Yes. Each purchaser whose deposit is released receives a certificate confirming their deposit is covered by the bond. If the developer cannot complete the home, the purchaser claims under the bond. The bond wording sets out exactly what is covered.

It depends on the scheme and on the underwriter's terms. Tell us the deposit taken per sale and the total expected and we will confirm what can be released when we give indicative terms.

Once the bond is in place, the sale contract provides for release and any conditions in the agreed terms are met. From there the deposits can be in your bank account within a week. Released money must be spent on the development.

The developer pays the premium. Ask us whether, on your scheme, the premium can be met from the released deposits.

Premiums typically work out at around 4-6% a year, depending mainly on the developer's financial strength, against 12-20% a year for mezzanine finance. Your terms confirm the exact rate and how it is applied to your scheme.

Purchasers claim their deposits under the bond, in line with the bond wording. That is the protection the bond exists to provide.

Often, yes. The existing sale contracts need to allow release, so we look at what has been agreed and what would need to change. Arranging the bond before sales launch is simpler.

Usually. A personal guarantee is normal and a counter-indemnity is often preferred. Other security, such as cash collateral, is considered case by case and your terms will say exactly what is needed.

That depends on your facility agreement. We read the facility terms early and will tell you if anything needs the lender's consent or agreement.

That is what it is for. Deposits that would otherwise be held by a solicitor as stakeholder until completion can be released to the developer, provided the sale contracts allow it and the bond is in place.

An extension can be requested for an additional premium, subject to the insurer agreeing. Tell us as soon as a delay looks likely so the extension is sorted before the term ends.

It depends mostly on how complete the information is. Recent accounts, the appraisal, the sales schedule and the facility letter up front make the biggest difference.

Tell us about your buyer mix when you enquire and we will confirm the position with the underwriter for your scheme.

For schemes in England, Wales, Scotland, N.Ireland and the Channel Islands.

No. Deposit release has been used on schemes from a single high-value home sold off-plan to developments of around 200 units.

No. Bonds are issued by specialist insurers. We arrange the bond for you, work through the underwriting and security with you, and track it through to release.