On the surface, Down Payment Bonds are a solution for consumers to not use their cash until closing. In reality, Down payment Bonds can be used by real estate developers to sell and market their properties to buyers by providing a finance solution that makes buying a property under development easier.

1. Real Estate Development and Down
Payment Bonds
Frequently Asked Questions About
Down Payment Bonds for
Real Estate Developers

2. Why would a purchaser use a Down
Payment Bond?
A down payment bond is a new financial option
that is now available to the purchaser for
their deposit or down payment required on real
estate purchases that may not be complete
months or even years. A perfect tool for pre-sales.
A down payment bond can be used for all or
part of the transaction’s required deposit amounts,
for as much as 20 percent of the
purchase price, and can be issued for a minimum
period of 3 months to 36 months or even longer.

3. Why would a purchaser use a Down
Payment Bond?
Down payment bonds replace the requirement to
outlay a cash deposit, allowing buyers to keep their
money working for them right up until closing. Then, at
closing, they pay the property’s full purchase price.

4. Why would a purchaser use a Down
Payment Bond?
By allowing this option gives the purchaser the
flexibility to utilize their existing equity as opposed
to using their cash funds . With a down payment
bond, there is no need to use cash for the required
down payment when purchasing a property.
Buyers using down payment bonds do not need to
withdraw cash from their savings or investments, or
obtain financing by using equity in another
property. A down payment bond is also less
expensive than traditional real estate financing. A
developer accepting the bond provides another
option to the purchaser which could lead to a
more favorable decision towards the purchasing
process.

5. What is the Benefit to the Developer?
When it comes to pre sales and marketing of any
given project that may not be complete for some
time, Down Payment Bonds offer a more secure way
for a buyer to purchase with comfort and confidence.
As a developer the more pre-sales that can meet the
financing threshold the more comfortable lenders are
willing to finance to a project.

6. What is the Benefit to the Developer?
So, the more options the developer can provide
their buyers will only help the sales and marketing
process of pre sales. In addition , a purchaser that
has been approved for a down payment bond
assures sellers and developers that buyers have
been qualified as having the financial capability
to complete the transaction. If the buyer does not
close the property transaction, The insurance
company “QBE “ pays the seller the full amount of
the down payment bond.

7. As a Developer, How Do I Make a Claim
When My Buyer Defaults?
If a purchaser does not complete their purchase, the
seller can make a claim directly to DPO, by providing
the following documents:
• A letter from the seller/seller’s attorney to DPO demanding
payment of the deposit bond and stating the reason why. This
letter must state that the purchaser has not completed their
purchase obligation under the purchase agreement/contract
and that the seller has not been paid the deposit by the
purchaser;
• A copy of the notice from the seller to the purchaser, where
the seller has cancelled/terminated the purchase agreement/
contract due to the purchaser not meeting their obligation,
entitling the Vendor to retain the deposit; and
• The original Down payment bond

8. Who is QBE Insurance Group?
Yes. Down Payment Bonds are underwritten by QBE
Specialty Insurance Company, a part of the QBE
Insurance Group Limited (QBE).
QBE Insurance Group Limited is one of the top 25
insurers and reinsurers worldwide with operations in all
key global insurance markets. QBE has operations in
49 countries with over 13,500 staff worldwide. Rated
"A" (Excellent) by A.M. Best and "A+" by Standard and
Poor's.
Visit their website for more information:
www.QBE.com

9. Who Can Apply for a
Down Payment Bond?
Eligible applicants must be US citizens.
Applicants can be individuals or couples. The
applicant may be an existing property owner
who wishes to purchase another property or
investors who wish to expand their property
portfolio.

10. How Does A Purchaser Qualify for a
Down Payment Bond?
To qualify for a Down payment bond an applicant will
complete a DPO application form and supply the
supporting information required as noted in the
application form.
DPO will then underwrite and assess the application
and determine whether the applicant has the
financial capacity to be able to complete on the
new property purchase taking into account the
applicants current overall financial position.

11. The Advantage
Down payment bonds are a better way purchasing in the pre sales of projects
For many of today’s property buyer’s, the cash required for the deposit is often tied up in their
current home or other investments. This can mean either expensive bridging finance or borrowing
from a finance company/bank at high interest rates.
Regardless of where the finance is obtained, interest charges, establishment fees and other up-
front costs connected with the loan can be expensive and time-consuming to arrange.
For buyers that do have the cash available for the deposit, they would prefer to tie up a small
portion of this, rather than the full deposit amount. This allows their deposit money to continue
working for them, right up until closing when they pay the full purchase price.

12. Connect with Us!
Down Payment Options
410 S. Rampart Boulevard
Suite #390
Las Vegas, NV 89145
Tel. 1.702.726.6818
info@downpaymentoptions.com
www.downpaymentoptions.com