Article: Collateral Foreclosure Damage For Condo Owners

The New York Times recently featured an article on how condo properties that have foreclosed affect other owners in the same development. It's something I've written about before (Article: Unpaid Fees Trouble Condos) and the NY Times article highlights the experiences of condo owners in Miami, San Diego and Chicago.

In particular, it mentions the experience of a lady, Ms Sanz, that bought a condo in a Miami high-rise four years ago. She's now being asked for fork out more per month in maintenance fees, yet still finds the building in a state of disrepair. In her case, nearly 1 out of 6 of her neighbours are facing foreclosure and struggling to make maintenance payments. A buyer taken to look at apartments in the development wants a written guarantee that he would not have to pay more in fees if he bought a unit. An interesting idea, but is it one that would really work? I understand his nervousness but if he's concerned about the building, he might be better off looking to buy elsewhere.

The NY Times also speaks of a condo development in Chicago - one that contains relatively few units. In such a situation, even if one owner gets into financial difficulties or forecloses, everyone else is affected. And in a worse case scenario in a small development, if 50-75% of units foreclose, the condo association may decide to disband entirely.

Article: Collateral Foreclosure Damage for Condo Owners (The New York Times, 15th May 2008)