Thursday, July 09, 2009

Condo Association Files Bankruptcy

by Bill McBride on 7/09/2009 04:25:00 PM

This might be the start of a number of condo / homeowner associations filing bankruptcy because of the housing bust ...

From the Daily Business Review: Bankruptcy: $1 million debt sends condo association into Chapter 11 (ht Soylent Green is People)

Facing almost $1 million in claims by unsecured creditors, a troublesome recreational lease, and at least 100 unit owners delinquent on payments of their fees, the association filed a Chapter 11 petition last month in U.S. Bankruptcy Court in Miami.

As one of the first condo association bankruptcies of the current economic crisis ... With residential foreclosures and personal bankruptcies soaring in South Florida, Maison Grande’s decision is expected to become more commonplace, said attorney Aleida Martinez Molina of Becker & Poliakoff in Coral Gables.
...
The significant drop in property values is a key factor pushing associations toward bankruptcy filings, said attorney Robert Kaye of Kaye & Bender in Fort Lauderdale. ... “In prior times, there was enough equity in all the properties [in an association] so that assets would likely exceed liabilities,” he said. “Now, since a large percentage of associations are upside down, that’s changing their view about bankruptcy. Their debts have overtaken their assets.”

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