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What Happens if a Condo Corporation/Association Goes Bankrupt?

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  • Mar 30th, 2010 7:11 pm
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[OP]
Jr. Member
Feb 11, 2008
152 posts
1 upvote

What Happens if a Condo Corporation/Association Goes Bankrupt?

Can anyone tell me what happens if a condo association goes bankrupt or a large amount of condo's remain vacant, could they infinitly increase condo fee's to the remaining residents ? How does the liability transfer to the residents of the condo? The reason i ask is because a family member is considering buying a condo in Detroit.

Thanks
2 replies
Jr. Member
Dec 22, 2005
164 posts
7 upvotes
they normally don't unless someone really screws up the book keeping.

who ever has the title to the condo units are on the hook.. so if the developer still owns the units then they are on the hook for all expenses.

if the bank owns or foreclosed the unit then the proceed of sale will goto towards the condo fees.
Sr. Member
Jan 10, 2008
999 posts
4 upvotes
Toronto
atc789 wrote:
Mar 29th, 2010 11:39 pm
Can anyone tell me what happens if a condo association goes bankrupt or a large amount of condo's remain vacant, could they infinitly increase condo fee's to the remaining residents ? How does the liability transfer to the residents of the condo? The reason i ask is because a family member is considering buying a condo in Detroit.

Thanks
"Vacant units" are actually owned by the builder. So the builder is still responsible for their share of condo fees. The more units they own, the more they have to pay.

Now, if the builder goes bankrupt before selling those units... than you have some problems.

Sometimes the builder would remortgage the building... and if you are not careful, they may include your unit as part of collateral even though they don't own it any more. That is why it is very important to buy title insurance especially in a new condo transaction.
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