Utah builder taking construction deposits w/ nothing to show for it. Help!

[Peter Pearson]

Good evening BPers,

I wanted to run my specific situation past the collective of you in hopes of some well thought out help. I'll give wavetops and hope to get some decent advice on moving forward.

Situation: I'm a realtor representing myself and one other client in a transaction. We both put down a construction deposit of $87k + $10K in earnest $ (in 2022) towards some townhomes that were supposed to be completed mid 2024. Along the way we signed an addendum stating the builder needed to extend the financing deadline to June 30th of this year, not a big deal up until about 2 weeks ago when their realtors stated the builder had to file a notice of default on the land to the company he acquired a bridge loan from. 

So far we've asked for construction deposit + EM deposit + $10K in liquidated damages back, which was an option on the contract in the event the builder defaulted. All we're getting back from builder's realtors are "all deposits were released to the builder and he isn't in a position to give back your money, contact your broker to figure out your options" also more lately we were given an "olive branch" to be able to hope on the builder's next project and he would allow us to put a lien on a few of the townhomes he's building to make us whole. Which they're waiting on financing approval on that project as well.

I'm not the smartest guy, but from some vague conversations with a lawyer.. he's saying this all just ends up in bankruptcy court and I'll be lucky to get back 70-80% of what we've put up for money, on top of having to pay his bill. This builder isn't the biggest around, but he has a name that most in the area would recognize, hence some of our initial trust in how the contract was written.

Questions: If builder pissed away all of our money on the "down payment on the land, engineering, architecture, environmental studies, ect".. What's the best way to get our money back?

We're not the only buyers in this situation, is there any power in finding other people that are being to the same as we are?

My current options: 1. Hire a lawyer and sue 2. Attempt arbitration/mediation (is this effective?) 3. Hope builder isn't just spiraling and go along with the lien on his next project? 4. Just go after him in collections court.

Final thoughts: It doesn't seem fair to me to give up almost $200K to someone and have nothing to show for it. I'm not sure the best route to go or what's exactly normal for builders in Utah (my first delve into new construction as a buyer), so any help would be appreciated.

Thanks in advance for your outlook.