It is very complicated to say the least... I think as you said it, it is that living paycheck to paycheck (or in this case deposit to deposit) that creates the mess to begin with. That's why overpaying deposits is problematic to a great degree because the builder becomes accustomed to counting on them for existence and the more you have in the queue, the greater beyond your means they may be inclined to live. I think the real solution is to have a trade association that offers life insurance for sale to it's members with the trade association being named as the beneficiary of the policy to be used for that very purpose. It would not cost much, and would restore the faith buyers need to have in builders.... I know this was talked about at the time of Kevin Gallagher's passing to a great degree because there were alot of people who were completely stuck and the Gallagher family didn't have anything they could offer them because the money was already spent.
Tim McKnight I recall has an internal mechanism of segregating deposits and moving them as the build went along, and I can appreciate that. But that isn't a legal way of protecting anyone per se because if anything happens, things get very complicated. This idea of having life insurance is a really good idea because a fund of 100k would have probably gone a long way to help people stuck at Kevin's passing.
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