The construction industry is facing a crisis with a wave of bankruptcies affecting companies of all sizes. When the developer of a new property goes bankrupt in the middle of building, it can be a nightmare for home buyers. In the worst case, they may be left without a new home and lose large sums of money.
A significant portion of Finland’s new projects involve RS properties or apartments that are already sold during the construction phase. Other New destinations differ in that apartments start to be sold only after the building control approves them for use.
When a developer goes bankrupt in the middle of construction, it could end the project. However, this does not happen in practice. “Perhaps this could happen if the building was almost finished,” says lawyer Tapio Nevala. “The bankruptcy estate has no assets and often no interest in completing the project.”
Even if a liquidation process occurs for an apartment sale, there is no guarantee that buyers will get their money back. “It is by no means clear that the buyer would get back what he paid,” says legal expert Tapio Haltia.
The alternative for home buyers is to continue the project themselves, which may require finding a new company to build at worst an unfinished house. However, this comes with additional costs and conditions that need to be considered carefully before making any decisions.