What is the Financial Guarantee of Completion?

What is the Financial Guarantee of Completion?

The financial guarantee of completion is an insurance given (by a bank or an insurer) to a property developer on behalf of the purchasers of the property to be built. This insurance provides a guarantee that in the event of the developer's default, the construction will be completed and the property purchased will be delivered. It is issued by an insurer who, in return for a percentage of the cost of the construction and several guarantees (mortgage, first demand guarantee, personal guarantee of the manager, etc.), undertakes to pay for the construction in the event of default by the builder. It should be noted that for commercial real estate operations, the Financial Guarantee of Completion is not mandatory. It is, however, mandatory for residential property.

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Updated on: 05/04/2022