Reply To: Are Bank Guarantees worth the paper they’re written on?



@mg wrote:

……say a developer has a site for 100 units at a development cost of 200.000 each. Do you believe that the developer has deposited with the bank the 20million?

Apologies mg, I overlooked your question.
In your example, no I don’t believe the developer deposits the total cost of the development.
He deposits the stage payments from the purchasers (average 25%-33% of total price depending on the individual arrangement).
On our development, I think all our deposits gave our developer collateral for about 20 million euros. After not building a brick for 3 years, pleaded unable to return monies as they had had to pay a lot of agents’ commissions and print a lot of brochures (?).
The bank refused to pay on the BG, they made us go to court. The judge found in our favour for monies to be returned and guess what – the bank submitted an appeal!