Results 1 to 16 of 16

Thread: My condo assn is bankrupt

  1. #1
    Banned
    Joined
    Feb 2008
    Posts
    958
    Thanks
    170
    Thanked 457 Times in 225 Posts

    Default My condo assn is bankrupt

    Does anyone know what that means? Is it true I can't sell my property now?

  2. #2
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: My condo assn is bankrupt

    ^^^ the answer to this question boils down to a whole bunch of specifics in regard to which legal entity actually owns the building in which your condo is located, whether or not the condo association has de-facto lien rights against the condo owners, etc.

    My guess is that if a forced condo sale were absolutely necessary it could still take place ... but at a seriously 'discounted' price. My guess is that the ability to sell at a non-distressed normal price will be contingent on the condo owner being able to 'clear the title' ... which may become extremely complex if condo association debts are in fact secured via liens against member condo owners.

  3. #3
    Banned
    Joined
    Feb 2008
    Posts
    958
    Thanks
    170
    Thanked 457 Times in 225 Posts

    Default Re: My condo assn is bankrupt

    Thanks Melonie. That is what I was afraid of. I have put so much into this place, fixing it up and putting in new appliances. And now I am afraid I'm stuck.

  4. #4
    Veteran Member
    Joined
    Feb 2005
    Posts
    230
    Thanks
    0
    Thanked 3 Times in 2 Posts

    Default Re: My condo assn is bankrupt

    This is why I have never understood the attraction of condos. It seems to me that you still have all the downsides IE someone suspiciously like a landlord still telling you what you can and can't do and you are paying them something way to simular to rent and you enjoy almost none of the advatages of owning but yet when it come to things that if you were renting "the landlord would take care of your on your own.

  5. #5
    God/dess hockeybobby's Avatar
    Joined
    Nov 2007
    Location
    Canada
    Posts
    4,969
    Thanks
    1,811
    Thanked 597 Times in 382 Posts
    Blog Entries
    1

    Default Re: My condo assn is bankrupt

    I hope it all works out ok for you lilmiss.

  6. #6
    God/dess threlayer's Avatar
    Joined
    Aug 2003
    Location
    Syracuse
    Posts
    5,921
    Thanks
    369
    Thanked 419 Times in 290 Posts
    My Mood
    Fine

    Default Re: My condo assn is bankrupt

    Do you want to sell or do you just want to get out fromunder the condo association problems?

    Chances are that some of the owners havent been able to pay their association fees. Often condo associations have the right to put liens against the owners' places that do not keep fees up to date. I don't think that means liens agaist all owners, just those who haven't paid.

    Eventually it will work itself out by sales to new owners, but in the meantime you'll probably get reduced services. Sounds like your association is a corporation, subchaper S or limited liability. So you probably have access to a lawyer who maybe can give advice.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

  7. #7
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: My condo assn is bankrupt

    Chances are that some of the owners havent been able to pay their association fees. Often condo associations have the right to put liens against the owners' places that do not keep fees up to date. I don't think that means liens agaist all owners, just those who haven't paid.
    This is only true if the condo association is still 'solvent' i.e. paying its own bills on time to service and maintenance providers. However, if the condo association itself has allowed matters to progress to the point of bankruptcy, then all of it's service and maintenance providers are lining up in bankruptcy court for their (partial) payoff. If their attorneys know that the homeowner's association has de-facto lein rights against condo owners, they may very well invoke such leins against ALL condo owners ( regardless of whether individual condo owners are behind in condo association payments or not ) until the bankruptcy is finally resolved. Thus any condo owner who attempts to sell out during this period will not be able to sell with a 'clear title'.

    This is a permutation of a somewhat similar situation which often develops with renters when their landlord goes bankrupt ... the creditors force foreclosure of the property in attempted satisfaction of debts, existing rental / lease agreements no longer fully apply, etc. While condo ownership does confirm more rights than a lease, those rights are still 'subordinate' to those of the building owner.

  8. #8
    God/dess threlayer's Avatar
    Joined
    Aug 2003
    Location
    Syracuse
    Posts
    5,921
    Thanks
    369
    Thanked 419 Times in 290 Posts
    My Mood
    Fine

    Default Re: My condo assn is bankrupt

    I see, but one thing is not clear...

    Quote Originally Posted by Melonie View Post
    While condo ownership does confirm more rights than a lease, those rights are still 'subordinate' to those of the building owner.
    The condo ownership (in total) and the 'building' ownership is the same; that is a LOT more than a lease. Owners own some part of the whole; for example, depending on how the contract was written, they own their own unit and the ground under it, but the community in whole owns the excess land and any other improvements made on it; thus owners own an undivided share. As well as any debts and liens brought against it.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

  9. #9
    God/dess Zofia's Avatar
    Joined
    Apr 2002
    Location
    Durham, North Carolina
    Posts
    2,417
    Thanks
    2,964
    Thanked 2,370 Times in 934 Posts

    Default Re: My condo assn is bankrupt

    Quote Originally Posted by Melonie View Post
    ...Thus any condo owner who attempts to sell out during this period will not be able to sell with a 'clear title'.
    Not so fast. A bankruptcy stops all collection attempts of existing debts at the time of the filing and moves that to the bankruptcy court. So, the only way to sell when the association is in default to creditors is through bankruptcy. That way a new owner actually gets title free and clear of the liens of the creditors.

    This is a permutation of a somewhat similar situation which often develops with renters when their landlord goes bankrupt ... the creditors force foreclosure of the property in attempted satisfaction of debts, existing rental / lease agreements no longer fully apply, etc.
    That depends on the state. In North Carolina, leases are no longer fully in force if, and only if the purchaser in foreclosure intends to inhabit the leased premises. If the purchaser in foreclosure does not intend to inhabit the leased premises, then a residential lease remains in full force and effect so long as the tenant pays her rent. Other states are different. For example, in Indiana if a landlord goes into foreclosure, leases remain in full force even where the new owner wants to live in the leased premises.

    The general rule is that bankruptcy does not void a lease. However, the court does have the right to hold a hearing to void a lease, especially a non-residential lease. If the court finds a lease is a "burden" on the bankrupt estate then it can void the lease but the creditors would have to pay damages to the tenant.

    HTH
    Z

  10. #10
    Curious Guest
    Joined
    Jul 2009
    Posts
    1
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Default Re: My condo assn is bankrupt

    If you are renting from a building and the bank forecloses on the property, it doesn't void the lease - in fact, the lease stays in place as the bank wants that rental income now and if they do sell the building to someone else, that person has the right to evict the current tenant under certain circumstances... which are determined by the HUD laws according to your state.

    Stirling Gardner
    aka Hollywood Landlord
    EZ

  11. #11
    God/dess threlayer's Avatar
    Joined
    Aug 2003
    Location
    Syracuse
    Posts
    5,921
    Thanks
    369
    Thanked 419 Times in 290 Posts
    My Mood
    Fine

    Default Re: My condo assn is bankrupt

    ^^ Doesn't that depend on how the contract/lease is actually written?
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

  12. #12
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: My condo assn is bankrupt

    ^^^ it's also somewhat of an 'apples and oranges' situation since a condo owner is not free to sell his 'property' independently as a free standing home owner would be ... and also since the condo owner has at least an implied obligation to help satisfy the debts of the building owner (since the condo owners' 'property' is a subset of the building owner's 'property', rather than a separate and distinct property).

  13. #13
    God/dess Zofia's Avatar
    Joined
    Apr 2002
    Location
    Durham, North Carolina
    Posts
    2,417
    Thanks
    2,964
    Thanked 2,370 Times in 934 Posts

    Default Re: My condo assn is bankrupt

    Quote Originally Posted by threlayer View Post
    ^^ Doesn't that depend on how the contract/lease is actually written?
    No. When Congress wrote the Bankruptcy Code it specifically voided all contract clauses that purported to void a lease in the event of a bankruptcy filing. If a party wants to void a lease on a property in bankruptcy, they can only do so with the approval of the court and only if voiding the contract will benefit the bankrupt estate.

    HTH
    Z

  14. #14
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: My condo assn is bankrupt

    ^^^ true but irrelevant where condo 'owners' are concerned. A condo owner's 'unit deed' is subordinate to the property's 'master deed'. As such, condo owners are not a totally separate 'indemnified' entity when claims against the 'master deed' property are made by unpaid creditors.

    While this varies somewhat from state to state, the general legal principle affecting condo owners is as follows ...

    (snip)"Employment contracts, management contracts, maintenance contracts, contracts for the supply of equipment or materials, and service contracts in which the association is one of the contracting parties and maintenance contracts and service contracts in which the association or the unit owners have an obligation or responsibility, directly or indirectly, to pay some or all of the fee or charge of the person or persons performing the service."(snip)

    Thus while it is technically possible to sell a condo while the 'master deed' is encumbered by creditors i.e. bankruptcy, because of this general legal principle every condo 'unit deed' is potentially subject to encumbrance / recovery efforts by the very same creditors. Thus the buyer of a condo 'unit deed' is guaranteed full rights to the property described by the 'unit deed', but is also exposed to potential financial liability via an indirect responsibility of individual condo owners to satisfy the unpaid debts of the 'association'. As such, the only way that a real world buyer would accept such 'undefined' liability would be to purchase the condo 'unit deed' at a substantial discount from 'normal' market value.

    Once the bankruptcy proceedings of the 'association' are completed, the potential liability of condo owners to help satisfy the unpaid debts of the 'association' (if any) will be clearly defined. This removes the issue of 'undefined' financial risk for the potential condo buyer, thus removing the 'risk premium' discount from the real world market value of the condo's 'unit deed'.

    ~
    Last edited by Melonie; 07-21-2009 at 04:27 PM.

  15. #15
    God/dess threlayer's Avatar
    Joined
    Aug 2003
    Location
    Syracuse
    Posts
    5,921
    Thanks
    369
    Thanked 419 Times in 290 Posts
    My Mood
    Fine

    Default Re: My condo assn is bankrupt

    Condominiums are not leased. They are mortgaged and/or owned.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

  16. #16
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: My condo assn is bankrupt

    ^^^ indeed condos are 'owned' i.e. a 'unit deed'. But they aren't WHOLLY owned in the same sense as a free-standing private residence. As such, condo 'owners' may indeed share some portion of liability in regard to any unpaid debts of the owner of the 'master deed', to which the condo owner's 'unit deeds' are subordinate.

Similar Threads

  1. The US is Bankrupt ... Lawrence Kotlikoff
    By Melonie in forum Dollar Den
    Replies: 7
    Last Post: 08-31-2010, 07:19 PM
  2. The American Empire is Bankrupt !
    By Melonie in forum Dollar Den
    Replies: 10
    Last Post: 06-22-2009, 09:38 AM
  3. When to buy a condo/try to get a mortgage?
    By IsabellaRouma in forum Dollar Den
    Replies: 10
    Last Post: 01-19-2007, 09:15 AM
  4. Replies: 0
    Last Post: 12-13-2006, 03:27 AM
  5. Saving for a Condo
    By TigersMilk in forum Dollar Den
    Replies: 2
    Last Post: 07-24-2006, 05:46 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •