Newsflash: The financial terms a new construction builder is asking seems very risky? Is this the norm?

My husband and I were set on buying a new construction build in a nearby suburb. The builders own a community and their plan is to build around 50 homes in that community. I would guess that maybe 35 homes are already built or under contract to being built. The builders gave us two options to finance the building of our new home. The homes average $1.2 million.Option 1 (the most common method according to the builder): Pay 20% of the estimated home price to the builder as down payment. However, this 20% is a check written to the developer, and not in escrow. Which means if the builder goes bankrupt during construction, we lose out on $200k+?Option 2): We purchase the land from the developer, and then for the rest of the amount the developer finances it by taking out construction loan from the bank. However, the developer has said they will need to put the land (that we purchased) as a lien/collateral in order to get the construction loan from the bank….which means that if the developer goes bankrupt during the construction process, then the banks have the right to take the land away from us? Not sure if this is mitigating risk at all?What the developer is asking seems a bit absurd to me (I am willing to put in money as a deposit but a $200k+ unsecured payment seems way too risky), but I am new to this so wanted thoughts on whether this is normal or not.