Createdmall development company, take the contract, deliver faulty building, accept payment, pay out funds to employees (subcontractors) and owners of the company, shut down company if the district comes after them.

It would incentivize his sort of behavior too.

Ensure that developers/owners may be held personally liable. There should be lots of ways to do this: bonds, insurance, promissory notes, collateral.

Also known as "Whoopsies I went bankrupt sorry!"

This actually happens today, even with all the existing rules.

Shell corporations can be made to funnel money around to the right people then die. As it is incredibly difficult to pierce the veil due to corporation protections being more important than human health and safety, all the "law" will find is a dead corporation with no assets. The developers will have already stripped it clean and started 10 more in the same way.

What if the owners were required to sign the affidavit personally and the affidavit included an assumption of personal liability for the damages if anything in the affidavit is found to be false?

Yes, it can be disincentivized with steep fines. But then you just end up back where we are now. Developers would not build if they face the future prospect of such steep fines. What happens if the code is unclear or ambiguous (and when big money is involved everything magically becomes ambiguous).

This is why a balanced regulatory approach is needed - one that is more proactive than reactive. By the time we're reacting way too much damage has been done.

This sounds like the sort of disincentive (after the units are sold and the horse has left the barn) that a good lawyer can easily prevent. Just like movies & funds can make/lose money that can't be clawed back, you just build an investment that pays out on sale to be nonexistent/bankrupt when fined.

Are there regulatory ways around this? Of course, but they are complex, restrict the market in other ways, and lead to different distortions.

The method for dealing with this is to require that the developer post a bond.

Bonds, however, create their own host of incentive problems.