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In a Condo...there is no separate building to file for BK. The individual Condo owners pwn fee simple title, (that is complete title) to their unit.

That could happen in a Co-op...where the building is owned essentially by a Corporation and the Co-op owners own shares in it.

Another Legal Perspective

Although you haven't provided much detail, if there is a bankruptcy then there must be outstanding debt.

Condominium ownership is a complex issue, especially in cases of bankruptcy or foreclosure affecting the developer when the construction has not been completed, there are unsold units and there are outstanding blanket mortgages and other debts that affect the condominium parcel and the common areas. Condominium projects have been victims of the depressed real estate market and many developers were funded for projects that were not well planned or stable from their inception.

A unit that has been sold is the property of the buyer. However, if the condominium project remains unfinished with outstanding debts, it is also likely that a viable condominium association was not established and the business of the condominium is not being monitored (condo fees, utility bills, insurance, maintenance, etc.). That type of situation leaves the unit owner in a position of owning a property with a decreasing value and without the customary benefits of condo ownership.

Many condominium projects "go under" and unit owners are left with an unsellable unit in an unfinished condominium. Sometimes another developer will purchase the developer's interest and complete the project.

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Q: What happens to a condo if the developer files for bankruptcy?
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What happens if the condo developer files for bankruptcy and hasn't finished the project?

The consequences vary depending on who is involved.If you are invested in such a project, best practices dictate that you work with an association, or at least real estate savvy attorney to help you recoup your investment.AnswerThe lender will try to market the project to find another developer willing to complete the construction. Generally, if it is successful the bankruptcy court will allow the property to be sold.


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