What happens to your 10% down payment when a new development goes bust?

I don't know but it looks like it's going to be common place in nyc
http://therealdeal.com/newyork/articles/foreclosure-sought-at-alexico-group-east-side-project-the-oliver-at-951-to-961-first-avenue

There are two possible scenarios: 1) Your contract includes an escrow agreement in which the seller's attorney or broker acts as escrow agent and your funds are protected. 2) Your contract doesn't include an escrow agreement and you are now a general creditor the the bankrupt developer.

IluvNewYork

I read it this morning, so unfortunate!

alexico also has the laurel. wow.

In general, the down payment is held in escrow and returned to you under multiple scenarios including sponsor's bankruptcy. You can add stipulations to the contract such as mortgage contingency or closing deadline, which if not met returns the downpayment to you.

"There are two possible scenarios: 1) Your contract includes an escrow agreement in which the seller's attorney or broker acts as escrow agent and your funds are protected. 2) you are a total moron and your attorney is incompetent."